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FCC tries to break wholesale-rate stalemate

By Scott Lanman
Bloomberg News

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WASHINGTON — The Federal Communications Commission (FCC), trying to break a stalemate over wholesale rates for access to telephone companies' networks, is holding private talks with Verizon, AT&T and other large carriers over the holiday weekend, two trade groups said.

CompTel/Ascent and the Association for Local Telecommunications Services (ALTS), which represent carriers that compete against regional providers such as Verizon, said the FCC invited six large companies in and is excluding hundreds of smaller operators.

"We're left out in the cold," said John Windhausen, president of the Washington-based ALTS, which represents carriers including XO Communications and Covad Communications.

None of the big carriers, such as Verizon and AT&T, have signed new wholesale agreements with each other since the FCC two months ago urged talks to end an eight-year legal dispute. In March, an appeals court rejected FCC rules that have helped new local carriers such as AT&T sign up millions of customers by renting equipment from the regional operators at discounts.

AT&T and MCI say they need the discounts to compete in the $127 billion U.S. local-phone market, while Verizon and the regional carriers say the government-set rates are below cost. The rules may expire June 15 unless the U.S. Supreme Court acts; a high-court challenge hasn't been filed yet.

"We're afraid that if there's a deal cut, then it takes the steam out of the Supreme Court appeal," Windhausen said.

The FCC asked Verizon, SBC, BellSouth and Qwest — the four regional carriers known as Baby Bells — along with AT&T and MCI to participate in talks this weekend, the trade groups said.

FCC spokesman Michael Balmoris declined to comment.

CompTel/Ascent said in a statement that it believes the talks would violate a federal open-meetings law.
 
Verizon spokesman Larry Plumb said in a statement the company had "responded to the FCC's request" for talks.

"Verizon also remains engaged in negotiations with more than 50 wholesale customers," the statement said. "Our participation in the FCC initiative in no way deters us from continuing our efforts with all wholesale customers who wish to work with us to reach agreements."