Verizon CEO: Industry will pay for FCC blunder

By: Kirk Laughlin
America's Network Weekly (www.americasnetwork.com)

Visibly fuming over the FCC's recent UNE-P order, Verizon Chief Executive Ivan Seidenberg predicted this week that the telecom sector faces more disruption and an uncertain spending environment due to the confusing nature of the agency is controversial decision.

The FCC order is so confused and circular it is not clear what next steps will follow,î said Seidenberg, at this week is Merrill Lynch Global Communications Conference. He made clear that Verizon would force the issue back into court. "We will take this to court and we will seek a stay.  There is a least one word in every paragraph of that order that is appealable."

Qwest CEO Dick Notebaert, who also made a presentation at the conference, echoed Seidenberg's comments. Notebaert condemned the order, saying that one of its biggest flaws is turning over regulatory decision-making to individual states.

The FCC's ruling affirmed line-sharing guarantees for competitive service providers, established originally in the 1996 Telecom Act, by transferring oversight to state regulatory bodies. The renting of lines has become the focus of an intense debate between regional incumbents, who argue they lose money through fixed-price leases, and CLECs, who believe access to incumbent networks in essential to maintain competition in the local loop.

"The regime of the UNE interconnection has always been flawed," said Seidenberg. "Our view is that it would eventually die anyway, and not because of regulatory convention. It would fail because, in the long term, technology would displace the boot-strapping of other people connecting to pieces of our network."

Seidenberg also repeated a charge that other critics have leveled against the FCC is recent days ó that the agency is responsible for market capitalization shrinkage in the wake of the ruling. He hinted that spending in the industry "may contract" if Verizon and the other RBOCs don't get more favorable regulations.

The RBOCs' buying patterns are considered an important gauge of industry health. Verizon wants to dig itself out of a major debt hole, to the tune of over $50 billion, which is a troubling metric to many Wall Street analysts.

The other FCC ruling, apparently providing some protections for incumbents as they deploy broadband networks, has been heralded by some as laying a path of liberation for incumbents. 

Seidenberg, however, was cautious about the decision, saying more time is needed to examine the actual wording. He pointed out that a FCC press release issued after last week's vote stated that companies "may not retire any copper loops, without first receiving approval from the relevant state commission." If the intent of the stipulation is to create a veto over whether obsolete facilities can be replaced, then the FCC has in effect failed to deregulate broadband, Seidenberg said.