BANGOR – Verizon Communications will need to make changes in how it gives smaller competing telephone companies access to its infrastructure before the Maine Public Utilities Commission agrees to sign on to the phone giant’s bid to sell long-distance service in Maine.
Verizon needs a favorable letter from the PUC that states that the telephone company is not trying to stymie other smaller telephone companies from competing for callers. On Friday, the PUC agreed to write the letter, but only if Verizon adheres to conditions that will force the company to demonstrate that it continues to open its market to competition. That could be done within a week.
The letter will be sent to the Federal Communications Commission in Washington, D.C., which has the ultimate authority in approving Verizon’s request to sell long-distance calling service.
Verizon technically is classified as a Bell operating company and is one of 22 companies nationwide that provide local telephone service. The Bell companies were formed when the Department of Justice divested nationwide telephone monopoly AT&T in 1982 and subsequently ordered that they be precluded from entering the long-distance market.
Fourteen years later, however, the federal government enacted the Telecommunications Act of 1996 that allows the Bells to seek permission from the FCC to sell long-distance service within a region. But first the Bells have to demonstrate that they have opened their local markets to competition and that they have met 14 conditions – all overseen by a state regulatory agency such as the PUC – that shows an irreversible competitive market.
On Friday, the PUC said it wants to set up a rapid response program under which competing local telephone exchanges can voice complaints if they feel Verizon is not giving them access to the telephone lines in a timely and cost-effective manner, said PUC Chairman Tom Welch.
The establishment of this program was requested by the Competitive Local Exchange Coalition, formed by four smaller telephone companies operating in the state that need access to Verizon’s infrastructure in order to stay in business. Members of the coalition include Mid-Maine Communications in Bangor, Oxford Networks, Revolution Networks in Unity and Country Road Communications in Saco.
Nick Winchester, vice president of sales and marketing for Mid-Maine Communications, said as an example a small company might need access to a particular telephone line system to route calls for a new client. Verizon, under the example, may not handle the small company’s request for access to those lines for months.
Under the current complaint-resolution system, the small company could protest its treatment to the PUC or Verizon, but sometimes those concerns aren’t addressed for months. By that time, the customer may have chosen another company for its phone service, Winchester said.
With the formation of the rapid response program, he said, complaints will be expediently handled. Verizon, too, could use the rapid response program to voice concerns about the smaller companies, he said.
Welch said that the PUC would have to set up the program and staff it, but acknowledges that the new complaint-resolution system “has the potential to reach fair conclusions with urgency.”
The smaller telephone companies have been opposed to Verizon’s request to seek permission to sell long-distance service in Maine. Over the last three months, they have been vehement in their opposition, stating that Verizon maintains such a strong monopoly in Maine that it is difficult for the smaller companies to compete with it.
But the conditions requested by the PUC on Friday would make it easier for the smaller companies to change their minds and let Verizon begin to sell long-distance service, Winchester said.
“We still believe there are issues, but we feel they will be handled in ‘rapid response,'” he said. “We’re not saying all is perfect.”
Besides the rapid response program, the PUC also told Verizon that it must agree to a performance appraisal plan that includes penalties if it is proven that the telephone giant is trying to backpedal and close a competitive marketplace.
The penalties could be up to 39 percent of Verizon’s annual net income, Welch said.
“It’s a very complicated process in how that happens,” he said. “The worse they are, the worse the penalties will be.”
Peter Reilly, a spokesman for Verizon-Maine, said the company is pleased with how the PUC has handled its request for the letter to be sent to the FCC. He said Verizon has demonstrated that the state’s telephone market is irreversibly open to competition.
Reilly said he could not comment on the PUC’s conditions until he actually sees a formal written request from the commissioners. But, he said, Verizon should not have any trouble complying.
“When we file with the FCC, Maine consumers and businesses will be a step closer to the day they can experience the benefits of competition that customers in Massachusetts and New Jersey now enjoy,” Reilly said.
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