Aug 25, 2004 (12:08 PM EDT)
Two Regional Bells Sue To Lift Access-Price Freeze

Read the Original Article at InformationWeek

The seemingly endless regulatory battles involving virtually all of the companies in the $127 billion telephony market have created a new skirmish. Verizon Communications and Qwest Communications this week asked a federal court to force the FCC to drop its price freeze on the fees their competitors pay to connect to their regional networks.

The litigation, filed before the D.C. Court of Appeals, seeks to overturn a six-month moratorium on the ability of the two former regional Bell companies to raise prices. The court filing represents yet another battle in the ongoing regulatory war that keeps telephone companies and customers from reaching any consensus on a future telecom roadmap.

The continuing uncertainty is particularly hard on large companies, whose data-communications managers are seeking future visibility, according to Pete Wilson, president and CEO of Telwares Communications. "This is just one of many regulatory issues being [handled] on a piecemeal basis," he said of the appeal in an interview. "You push one button here to solve a problem and it causes another problem to pop up. Everything should be looked at holistically."

The two regional Bell companies are seeking the right to raise the rates they charge competitors, including long-distance providers AT&T and MCI, immediately, rather than waiting the six months the FCC wants. "It is simply inexcusable for the FCC to flout a binding judicial determination yet again, and to extend those never-lawful requirements for nearly another year," the companies said in their court filing.

While most consumer groups believe the demise of wholesale discounts for access fees the regional Bells charge competitors will cause consumer rates to increase, Telwares' Wilson believes the constant upheaval in the regulatory scene causes large companies to hesitate in making telecommunications business decisions because of the uncertainty.

"There's generally no right answer for any one enterprise," said Wilson. "And the decisions are different in enterprises than [they are] for consumers. In Fortune 500 companies, typically 60% of telecommunications traffic is data and only 40% is voice. Data continues to grow and voice continues to shrink."

Voice over Internet Protocol is rapidly gaining in importance on the telecommunications regulatory scene; its status changes and is hotly debated from state-to-state and among different federal agencies. Wilson said decisions on voice over IP by big businesses are often delayed because of the confusion over regulatory issues. "Voice over the Internet isn't going to happen as fast in the enterprise space," said Wilson. "You might save some money in the short term, but you should hesitate before you throw away millions of dollars in equipment when the outcome of regulatory issues is still up in the air."

After Verizon and Qwest filed their motion, various trade associations chimed in with opinions. The U.S. Telecom Association sides with the regional Bell companies and complained that, after previous attempts, those companies have had to file the appeal. A spokesman for the Association for Local Telecommunications Services, which represents the regional Bells' competitors, said the FCC's six-month moratorium was needed to keep the telecommunications market stable while regulatory issues are resolved.