The war of words is heating up between Verizon and a group of competitive local exchange carriers (CLECs) determined to prevent the incumbent from getting regulatory freedom in six of its local service markets, including Boston, New York City, Philadelphia, Pittsburgh, Providence and Virginia Beach. Verizon’s forbearance petition, now before the Federal Communications Commission, will be decided on or before Dec. 5.

If granted, the petition would allow Verizon to set its own terms and prices for reselling its local loops to competitors, something the CLECs say would be disastrous for them and for the businesses they serve.

The squabbling is over the degree of competition that actually exists in the six markets. In a letter sent to the FCC this week, Verizon insists businesses and consumers have multiple options, and that the CLECs are attempting to mask the true state of the market. The company pointed to what it calls “voluminous information” detailing where competitors have facilities in each of the six markets.

“Verizon demonstrated that in each of the six MSAs there is extensive competition from cable companies, who have ubiquitous networks they are using to provide services to residential and business customers alike,” the filing reads. “In addition, there is a wide range of other intermodal competitors – such as wireless, fixed wireless, and over-the-top providers who provide a significant and growing alternative to both business and residential customers.”

Tom Cohen, an attorney for Kelley & Drye, which is representing XO Communications, Covad Communications and others, said it is Verizon that is attempting to pull a fast one here.

“They are throwing a lot of things out,” he said. “The commission knows this is a diversionary tactic - it is looking for people that really have plant out there.”

The debate has come down to determining which market data to believe. Verizon originally used E911 data to claim that CLECs had extensive reach, while the CLECs themselves argued for use of GeoResults data, from a privately developed database. The CLECs are now providing their own data, as are the cable companies, in response to requests from the FCC.

XO’s building penetration data shows it has penetration into only 0.01% of all its on-net buildings in the six markets Verizon wants to open up. An analysis by XO and Covad Communications of Time Warner Cable’s facilities-based penetration of the New York market indicates TWC has less than one-fifth the cable penetration in Omaha, where the FCC granted Qwest Communications’ forbearance petition. In issuing that decision, the FCC established Omaha as the standard for determining the appropriate level of competition for forbearance.

Verizon calls XO’s data “unsubstantiated” and said it contradicts the company’s own Web site, on which it claims to have fixed wireless spectrum reaching 95% of the population in the 75 top markets.

“I would best call broadband wireless an emerging service,” Cohen responded. “They don't have a lot of people yet signed up. Technically it can work, but do customers consider it a close substitute today?”

The cable companies had entered competitive information last spring, but added to that data in response to a specific request from the chief of the wireline competition bureau, Cohen said.
That data is now coming in.

“First we looked at what came in from Time Warner Cable in New York, and it was pretty close to what Time Warner Cable filed in the spring,” he said. “We examined it and found it doesn't meet what we understand to be the Omaha standard. We got data from Comcast just yesterday, and after we examined it, we reached the same conclusion - it is similar to what they filed in the spring and not up to our understanding of the Omaha standard. We have gotten Cox data for Providence so far, so we are looking at that and working with the Comcast data for that market, but we are still working on that. We are waiting for Cablevision. We know Cablevision has a
significant competitive presence in the New York market.”