FUMO, VERIZON TO PROPOSE TELECOMMUNICATIONS SETTLEMENT
HARRISBURG, December 5, 2000 ĖIn the hope of quickly creating free market competition for local telephone service and upgrading Pennsylvaniaís telecommunications network, State Senator Vincent J. Fumo (D-Philadelphia) announced today that he has reached a settlement with Verizon Corporation (formerly Bell Atlantic) in their long-running legal battle.
The agreement includes reductions in the rate that Verizon competitors pay for access to the telephone network, various approaches to separating Verizonís marketing operation from its network management operation, and creation of a telecommunications economic development fund.
"I have fought for two and a half years to make sure that consumers receive the best possible telecommunications service at the lowest possible price. It has been a difficult battle. I believe this compromise will allow true local competition to take hold soon in Pennsylvania, without continued litigation," Fumo said. "It is time to halt litigation and implement competition."
Under the proposed terms, which the Pennsylvania Public Utility Commission (PUC) must approve, Verizon would agree to a code of conduct under which aggrievedparties could seek remedy if Verizon impedes local competition through its management of the phone network infrastructure.
Verizon would structurally separate its advanced services such as high-speed data transmission and high-speed Internet access, creating a distinct affiliated company to sell those types of services.
In addition, the parties have agreed to network access rate discounts contained in Bell Atlanticís settlement proposal of last January. That is the rate that potential competitors must pay Verizon for use of the phone network. At the urging of Fumo and others, the PUC had ordered Verizon to reduce those rates in order to make it financially feasible for other local phone carriers to compete for business.
Another provision is an increase in the fines Verizon must pay when it does not supply timely connection services. Verizon will deposit those increased sums into a fund to be used for telecommunications economic development. The fund would be controlled by a four-member board, appointed by each of the four legislative caucuses. Three of the four members would have to approve all spending decisions.
Fumo, two Republican senators, and potential Verizon competitors originally proposed the fund more than two years ago, but the PUC did not include it in its global order.
During the extended legal proceedings, Fumo, Republican Senators Roger Madigan of Williamsport, Mary Jo White of Venango County, and others argued that Verizon currently holds an essential monopoly on local telephone service. They have contended that robust competition is necessary to bring the benefits of advanced telecommunications technology to Pennsylvania.
Fumo pressed the PUC to lower the network access rates and to direct Verizon to structurally separate its wholesale and retail operations as a means of ensuring that Verizon did not enjoy an unfair competitive advantage over other local carriers.
"Structural separation is an efficient tool to spur competition," Fumo said, "but it was also a contentious issue. The alternatives to pure structural separation that are in this agreement will help create competition without further delays, and will safeguard consumer interests."
Upon adoption of the settlement, Verizon would drop all of its legal appeals to the PUC order.
Fumo noted that he, Madigan and White had won a series of decisions before the PUC and Commonwealth Court, in which Verizon had challenged the legality of their proposals and even their right as senators to participate in the case. Fumo had frequently expressed the hope that Verizon would halt its litigation strategy and negotiate a settlement that would bring about genuine competition.
"Iím pleased that Verizon, after a series of court actions that were difficult andfrequently acrimonious, decided to work out a plan that is in the best interest of Pennsylvania consumers," Fumo said.
Copyright 2000 Sen. Vincent J. Fumo