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Strangling Deregulation

_{Hance Haney
March 7, 2008
Technology}

Before the Federal Communications Commission
Washington, D.C. 20554

In the Matter of Petition To Establish Procedural
Requirements To Govern Proceedings for
Forbearance Under Section 10 of the
Communications Act of 1934, as Amended

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WC Docket No. 07-267

COMMENTS OF HANCE HANEY
DIRECTOR & SENIOR FELLOW – TECHNOLOGY & DEMOCRACY PROJECT
DISCOVERY INSTITUTE

The Petition filed by Covad Communications Group, NuVox Communications, XO Communications, LLC, Cavalier Telephone Corp., and McLeod USA Telecommunications Services, Inc. claims that because of “flaws inherent in the statute and shortcomings in the Commission’s implementation of the provision, Section 10^[1] has become a magnet for controversy.” ^[2]

I. SECTION 10 DEMONSTRATES THAT PROCOMPETITION POLICIES WERE MEANT TO BE TEMPORARY AND THAT CONGRESS WAS SERIOUS ABOUT DEREGULATION

The primary objection to Section 10 concerns the “deemed granted” clause which provides that any forbearance petition shall be deemed granted “if the Commission does not deny the petition for failure to meet the requirements for forbearance” within one year unless the Commission extends the one-year period by 90 days. According to the petitioners, the provision creates a “new and far different mechanism from the Act’s general processes for the regulation of telecommunications carriers and services.”^[3] Petitioners are correct. That was the goal.

The “deemed granted” clause was included in the amendment^[4] offered by former Senate Majority Leader Bob Dole (R-KS) to the Telecommunications Act of 1996. The purpose of the amendment, according to Senator Dole, was to

force the Federal Communications Commission to eliminate outdated regulations, and do so in a timely manner. Currently, there is no guarantee that the Commission will ever act on requests that it forbear on regulations. Under this amendment, the Commission must respond within 90-days—60 more can be added if the issue requires additional scrutiny.^[5]

Having served as the legislative assistant to former Senator Bob Packwood (R-OR) during the Senate consideration of the 1996 act, I was involved in the deliberations which resulted in the inclusion of the “deemed granted” approach in the Dole Amendment. A deadline-only approach was briefly considered and was rejected because it was felt that the Commission could fail to meet a deadline and it would take litigation to enforce it. It was assumed by many that the Commission would be under enormous pressure to withhold deregulation for as long as possible, as recent opposition to forbearance petitions confirms.

The deadlines for the consideration of forbearance petitions were extended in conference. Also, a safeguard was added to ensure that the Commission didn’t undo the “pro-competitive” features of the 1996 act “until it determines that those requirements have been fully implemented.”

Lest anyone has overlooked the fact, it’s worth repeating here that the Commission has approved Section 271^[6] applications which include findings that those requirements have for some time been fully implemented in every state with respect the nation’s largest telecommunications carriers. Nevertheless, obviously Title II regulation is and always will be of great value to the competitors of incumbent local exchange carriers.

In this proceeding, petitioners’ real goal is for the Commission to create a procedural minefield that would allow the Commission to reject substantively meritorious forbearance petitions on nit-picky technical grounds and be upheld on appeal. The result could be to force a forbearance petitioner to refile their forbearance petition a couple times, thus resetting the clock and delaying regulatory relief beyond the 12-15-month consideration period specified by Congress.

II. PETITIONERS FAIL TO DEMONSTRATE THE NEED FOR ADDITIONAL PROCEDURES.

Petitioners are really seeking the repeal of Section 10,^[7] but of course the Commission does not have that authority. They offer a number of suggestions for making the decision-making process more rigid and less flexible. The net result is to reduce the current focus on the substance of forbearance petitions in favor of a greater focus on process. The Commission’s current flexible approach includes and certainly doesn’t preclude most if not all of the specific elements petitioners claim are necessary for a rigorous review of forbearance petitions with full public participation.

Petitioners fail to explain why many of their proposals are necessary at all. For example, petitioners’ first proposal is for the Commission to adopt a policy of applying the Administrative Procedure Act’s notice-and-comment procedures to all Section 10 forbearance proceedings. But as even the petitioners acknowledge, the Commission’s practice already is to provide interested parties with the opportunity to comment on a forbearance petition. Petitioners fail to identify a single specific advantage or justification, noting only that it would be nice for the Commission to “institutionalize this practice to ensure that potentially-affected parties have a well-defined right to have their views taken into account.”^[8]

Similarly, petitioners’ proposal for the Commission to “adopt a rule inviting states to report” to the Commission on the potential effects of sections 251^[9] and/or 271 forbearance in their states is completely unnecessary in view of the Commission’s current practice which encourages state participation.^[10]

Other proposals are potentially a bit more serious. Petitioners candidly admit that they looked to Section 271 for some of their process ideas, such as their proposal for a complete-as-filed requirement.^[11] The pros-and-cons of a complete-as-filed rule are different for a 90-day process (Section 271) versus a 12-15-month process (Section 10). In a 90-day process, there is little risk of petitions becoming stale and commenters have a very limited window for involvement. It’s the opposite in a process which lasts 12-15 months. Forbearance petitioners must be able to update a petition which has been pending at the Commission for approximately one-year without being forced to reset the clock.

At least one of the proposals plainly misconstrues the plain meaning of Section 10. Petitioners want the Commission to adopt a rule specifying that the forbearance petitioner has the burden of proof.^[12] But how could that work when the statute says a forbearance petition automatically goes into effect unless the Commission denies it in whole or in part within 12-15 months and explains its decision in writing. The statute makes clear that the burden of proof is on the Commission.

Petitioner’s proposal to permit Confidential and Highly Confidential documents submitted in Section 10 forbearance proceedings to be used in related proceedings at the Commission or in the states^[13] could require a forbearance petitioner to surrender much control over competitively-significant information. The petitioner would have no idea who ultimately may be able to see the information and for what purpose. Participants weigh the pros and cons of submitting competitively-sensitive information to the Commission. The effect of this rule would be to make it impossible to fully predict the cons and thus increase the likelihood that the information would be withheld. Such a rule compromises the integrity of the rulemaking process.

Although there is much else in the Petition about which to comment, these examples hopefully demonstrate that the Petition is ill-conceived and should be denied.

CONCLUSION

The paradigm has shifted with the implementation of Sections 251(g) and 271. Proponents of continued regulation of incumbent local exchange carriers now face a higher burden. This should come as no surprise, as Section 10 was discussed and amended in the Senate and in conference in the 104th Congress. The “deemed granted” feature proposed by Senator Dole was approved by well over a two-thirds recorded Senate vote. Only Congress can change it.

The Commission already affords interested parties ample opportunity to make their views known, and can always be asked on a case-by-case basis to modify the process if necessary to protect the legitimate rights of all parties. The Commission should retain its flexibility to act as the occasion warrants and, in any event, cast a skeptical eye towards proposals by one side which would appear to create process hazards mainly for the purpose of hampering the other side, as is the case here.

Respectfully submitted,

/s/

Hance Haney
Senior Fellow
Director – Technology & Democracy Project
Discovery Institute

1015 15th Street, NW
Suite 900
Washington, D.C. 20005
Mar. 7, 2007

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