[ Text Version | WordPerfect Version ]

May 18, 1998

Concurring Statement
Commissioner Susan Ness

Re: Memorandum Opinion and Order on Independent Telephone & Telecommunications Alliance's Petitions for Forbearance for 2% Mid-Size Local Exchange Companies and for Reconsideration of the Amendment of the Commission's Rules to Establish Competitive Service Safeguards for Local Exchange Carrier Provision of Commercial Mobile Radio Services: Implementation of Section 601(d) of the Telecommunications Act of 1996

The Independent Telephone and Telecommunications Alliance's (ITTA) petition for forbearance provides an opportunity to take a hard look at the Commission's rule requiring incumbent local exchange carriers (LECs), including mid-size LECs, to form a separate affiliate before providing in-region commercial mobile radio service (CMRS). The rule is designed to prevent an incumbent LEC from misallocating costs to its regulated local exchange business in order to benefit its competitive CMRS affiliate operations and to detect discriminatory interconnection practices and pricing by the incumbent LEC against unaffiliated CMRS providers.

While the separate affiliate rule serves these important purposes, structural separation becomes less essential as competition in both the local exchange market and CMRS market develops. Although the CMRS market is becoming increasingly competitive, I am not convinced from the record in this proceeding that sufficient competition has developed in the local exchange market to protect consumers if we were to forbear from the separate affiliate rule. For this reason, I concur with three of my colleagues in denying ITTA's petition on behalf of mid-sized LECs.

I only concur, rather than join my colleagues, in denying forbearance, because, in my view, the Commission did not conduct a rigorous forbearance analysis in this instance. The analysis primarily relied on findings made in the 1997 LEC-CMRS Report & Order with little consideration of whether complaints had been lodged against mid-size LECs or current competitive conditions. The Commission has a duty to undertake a thorough Section 10 analysis. Of course this includes consideration of any evidence presented in the record, but the record should be the starting point, rather than the ending point, for the Commission's analysis.

Other factors could have been considered in the analysis. For example, before the separate affiliate requirements were imposed on mid-size LECs, there were few, if any, complaints lodged by unaffiliated CMRS carriers against mid-size LECs relating to improper cross-subsidization or discriminatory interconnection. Interestingly, no unaffiliated CMRS carriers filed comments raising these concerns about mid-size LECs if the separate affiliate requirement were to be lifted by the Commission. Also, as we transition to a competitive marketplace, there may be other less burdensome regulatory approaches to safeguard unaffiliated CMRS carriers and their customers from a mid-size LEC's market power over local exchange service. Now that interconnection agreements have been entered into between LECs and unaffiliated CMRS carriers, these agreements could serve as a benchmark for assessing the interconnection terms provided by mid-size LECs to unaffiliated CMRS carriers alleging interconnection discrimination.

Ultimately, consideration of these factors may not have changed the outcome of the Commission's decision in this case. However, in the future, the Commission should strive to be more comprehensive and aggressive when conducting its forbearance analyses.

I look forward to working with both mid-size LEC and CMRS carriers to develop a more robust record so that the Commission can determine whether our structural separation rules continue to promote competition or now detract from competition.