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Verizon plays unfair, competitor charges

WorldCom plans to ask the FCC to reject Verizon Communications' petition to offer long-distance in Massachusetts, in part because of the Bell's refusal to split lines for competitors.

The increasing demand for high-speed Internet access has some competitive local phone providers in a bind because the Bell company they interconnect with may not be permitting them to offer DSL over those lines.

DSL sends data over voice lines, and to do so the lines are split by the line owner, usually a Bell company. WorldCom would like to offer local phone service and resell DSL service in Massachusetts but says the fees it would have to pay to Verizon Communications are too high for entry.

As a result, WorldCom plans to tell the Federal Communications Commission on Monday that the agency should reject Verizon's petition to offer long-distance in Massachusetts, in part because of its refusal to split lines for competitors.

As DSL becomes more popular, consumers may be told they can't have DSL unless they get a second line or switch their service to the local Bell company.

"The problems with line splitting are huge" in Massachusetts, said Keith Seat, a senior counsel with WorldCom. "That's going to be very important for competition down the road."

He said WorldCom would seek to allow any future local phone customers in that state access to a DSL provider such as Rhythms NetConnections, but "there's no way to do that now."

Recently the Massachusetts Department of Telecommunications and Energy (DTE) essentially codified that Verizon is under no obligation to split lines, said Robert Lopardo, public policy director for WorldCom's northern region.

The FCC hasn't addressed the issue directly. Instead it issued a ruling last fall on line sharing that requires Bells to allow competing DSL providers on their lines.

In granting SBC Communications the right to offer long-distance service in Texas, the FCC mandated line splitting there. Texas and New York regulators since have cited that FCC ruling in requiring line splitting.

WorldCom executives maintain that the Texas decision should be interpreted to mean that all Bells, including Verizon, are obligated to split lines for competitors.

Not surprisingly, Bells disagree. Given that the FCC's Enforcement Bureau has made no effort to force line splitting in Massachusetts or elsewhere, they appear to be winning by default.

Verizon and others say there are numerous technical hurdles required in implementing line splitting for competitors. They also grouse that line splitting is yet another way for competitors to make revenues, particularly the large profits that can come from broadband, at the expense of the line owners, namely the Bells.

In Massachusetts, at least, WorldCom says there's no profit to be made in local phone service. According to rates approved by DTE that competing local providers would have to pay Verizon to gain access to its switches, a competitor would lose $10.84 per month per customer providing service in that state.

"It's a price see story: Find a broadband provider squeeze," said Mary Brown, WorldCom vice president for public policy, adding that it's something she's hoping the Department of Justice will examine for antitrust violations.

DTE is expected to tell the FCC on Monday that it approves Verizon's entry into the long-distance market. But Verizon has issued a pre-emptive strike against the high rates it charges competitors in Massachusetts by offering the significantly lower rates available in New York, where Verizon already has won long-distance approval.

Still, those rates are under review by the New York Public Service Commission because some data provided by Verizon wasn't cost-based. Those rates are expected to go down.

"In addition to exceeding cost and being under investigation in New York," said WorldCom spokeswoman Elena French, "the current New York rates fail to eliminate the anticompetitive price squeeze that would allow Verizon to underprice its competitors at every turn once it gains long-distance approval."

If approved, Massachusetts would be the third state to see a Bell company win long-distance approval. Several more Bell applications are expected to be filed to the FCC by the end of the year.