FCC Announces that Verizon Petition for Forbearance is Deemed Granted

March 21, 2006. The Federal Communications Commission (FCC) issued a release that states that the FCC, by operation of law has granted Verizon's December 20, 2004, petition for forbearance from Title II of the Communications Act, and the FCC's Computer Inquiry rules.

The FCC adopted no order or decision upon a majority vote of the members of the Commission. The FCC issued only a short release, and Commissioners wrote separate statements.

The release states as follows: "The Verizon telephone companies (Verizon) filed a petition for forbearance from Title II of the Communications Act of 1934, as amended, and the Commission's Computer Inquiry rules on December 20, 2004. On December 19, 2005, the Commission extended the forbearance deadline to March 19, 2006. Verizon amended its petition on February 7 and February 17th, 2006. Section 10(c) provides that a forbearance petition ``shall be deemed granted if the Commission does not deny the petition for failure to meet the requirements for forbearance under subsection (a) within one year after the Commission receives it, unless the one year period is extended by the Commission.´´ This is to inform the public that, pursuant to section 10(c), the relief requested in Verizon’s petition was deemed granted by operation of law, effective March 19, 2006."

See, Verizon's December 20, 2004, petition [29 pages in PDF], its letter of February 7, 2006 (part I [25 pages in PDF] and part II  [PDF]), and its February 17, 2006, letter [1 page in PDF]. This proceeding is Docket No. 04-440.

FCC Chairman Kevin Martin and Commissioner Deborah Tate wrote in a joint statement [2 pages in PDF] that "Broadband access is essential to an expanding Internet-based information economy. Promoting broadband deployment is one of the highest priorities of the FCC. To accomplish this goal, the Commission seeks to establish a policy environment that facilitates and encourages broadband investment, allowing market forces to deliver the benefits of broadband to consumers. Today, we take another step in establishing a regulatory environment that encourages such investments and innovation by granting Verizon’s petition for regulatory relief of its broadband infrastructure and fiber capabilities. This relief will enable Verizon to have the flexibility to further deploy its broadband services and fiber facilities without overly burdensome regulations."

They also wrote that Verizon's petition and clarifications seek forbearance for broadband services, including "packet-switched broadband services, such as Frame Relay and Asynchronous Transfer Mode Cell Relay (ATM) as well as non-time division multiplexing-based (non-TDM-based) optical networking, optical hubbing, and optical transmission services."

The added that Verizon's request "excludes traditional special access services (DS1 and DS3 services) and excludes TDM-based optical networking. Verizon also stated that it would continue to make these services available as wholesale common carrier services. Finally, Verizon also narrowed its petition by stating that it ``does not seek forbearance of federal universal service obligations for the services at issue in this petition.´´"

Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that the FCC now "abdicates oversight of the telecommunications services used by America’s most technology-dependent consumers. This course raises the specter of price hikes and fewer choices for businesses, banks, universities, government agencies and other high volume users of communications services, in addition to consumers in Rural America."

He added that the "Congress has given the Commission a powerful tool in our section 10 forbearance authority, but the Commission must wield this tool responsibly. By allowing this petition to grant by operation of law, and without a shred of analysis, the Commission prejudges important open proceedings and ignores precedent. It helps one telecommunications giant at the expense of virtually everyone else, including small and rural telephone companies, and business users of all sizes."

Commissioner Michael Copps wrote in a separate statement [PDF] that "I am deeply disappointed at the outcome of this proceeding. This is not the way to make environment-altering policy changes."

Copps continued that "this sweeping outcome is unaccompanied by any regulatory footsteps. Here we permit a forbearance petition go into effect that erases decades of communications policy in a single stroke. In effect, we provide industry the pen and give it the go-ahead to rewrite the law."

He also argued that "the contribution base for universal service could be put in jeopardy. Rural America relies on the universal service fund to ensure they have telecommunications on a par with the rest of the country. Without it, too many places would not have phone service, much less the possibility of broadband. By pulling a whole swath of services out of the obligation to contribute, universal service could be on newly shaky ground."

Copps also criticized this action for its likely impact upon regulation of privacy, disability access, interconnection, 

CALEA. Copps wrote that "By failing to act, national and local law enforcement agencies charged with protecting the American people could find that key networks are no longer subject to the Communications Assistance for Law Enforcement Act (CALEA)."

Adelstein wrote that "We also put at risk the law enforcement access protections under section 229 and the Communications Assistance for Law Enforcement Act (CALEA). Just last fall, we adopted a very complicated legal analysis to keep wireline broadband Internet access services within the scope of CALEA, a decision that is currently subject to appeal. Here, the Commission fails to take any such preemptive action, potentially pushing these services outside the scope of CALEA's protections."

In contrast, Martin and Tate wrote in a footnote that "Our action today does not constitute a failure to ensure adequate law enforcement access to Verizon’s broadband services Rather, as we made clear in our CALEA decision last summer, broadband internet access services, and the facilities used to provide such internet access, are subject to the Communications Assistance for Law Enforcement Act."

The just announced deemed granted disposition is not a final order of the FCC subject to judicial review. The FCC's order of August 5, 2005, is subject to judicial review, and has been challenged. The U.S. Court of Appeals (DCCir) will hear oral argument on May 5 in ACE v. FCC. Moreover, a plain reading of the relevant statutes would lead the Court to overturn the August 5 CALEA order.

See, story titled "FCC Amends CALEA Statute" in TLJ Daily E-Mail Alert No. 1,191, August 9, 2005. The FCC released the text [59 pages in PDF] of this item on September 23, 2005. It is FCC 05-153 in ET Docket No. 04-295 and RM-10865. See also, story titled "FCC CALEA Order Challenged" in TLJ Daily E-Mail Alert No. 1,240, Wednesday, October 26, 2005. See also, ACE brief [71 pages in PDF] and FCC brief [52 pages in PDF]. This case is American Council on Education, et al. v. FCC and USA, U.S. Court of Appeals for the District of Columbia, App. Ct. Nos. 05-1404, 1408, 1438, 1451 and 1453.