FCC Deregulates Verizon Broadband Prices

Corporate customers blast FCC's unusual move and fear price increases

The Federal Communications Commission announced last week that it deregulated the prices Verizon Communications Inc. can charge businesses for high-speed data services, a move that outraged corporate customers.

"Verizon was already price-gouging customers while it was regulated, and this action significantly raises the risk for prices to increase on the broadband building blocks for enterprise customers," said Washington attorney Colleen Boothby. She represents a group of 27 corporate customers known as the Ad Hoc Telecommunications Users Committee.

The FCC decision, which took effect March 19 without a formal vote, exempts Verizon from long-standing regulations requiring carriers to file rates with the FCC for approval.

The corporate telecommunications user group had argued in a 14-page brief to the FCC that Verizon shouldn't be exempted from FCC rules because business broadband markets are not yet competitive and services are costly.

"This kind of decision -- to give Verizon what it wants, regardless of whether that hurts customers -- is what gives Washington a bad name," Boothby said. She and other government observers predicted that the decision will be appealed.

"Anybody who buys these services for a living knows that the market for business broadband just isn't competitive," Boothby said. "That may be a politically inconvenient fact, but it's still a fact."

With one seat unfilled on the five-member FCC, commissioners were split along Democrat and Republican party lines over the Verizon petition for exemptions. Although the matter never came to a vote, Verizon's petition was approved under a rarely used statute that allows a company's request to be approved unless the FCC denies it within a certain period of time. That period expired on March 19, and the decision was announced the next day.

FCC Chairman Kevin Martin
FCC Chairman Kevin Martin
FCC Chairman Kevin Martin and Commissioner Deborah Taylor Tate, both Republicans, said in a joint statement that the FCC decision will help Verizon roll out broadband by eliminating "overly burdensome regulations" that deter investment in new services.

But the Democrats on the FCC, Michael Copps and Jonathan Adelstein, said in separate statements that they opposed the Verizon exemptions. Copps complained that the ruling "erases decades of communications policy in a single stroke," and said, "This is not the way to make environment-altering policy changes."

Verizon welcomed the FCC action, which it said will help to control prices. "The end result will be greater innovation, more competitive pricing and more flexible arrangements tailored to meet the needs of our business customers," said Susanne Guyer, Verizon's senior vice president for federal regulatory affairs, in a statement.

President Bush nominated Republican Robert McDowell to be the fifth FCC commissioner last month, but he has not yet been confirmed by the U.S. Senate.

Copyright © 2006 IDG Communications, Inc.

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