Verizon asks FCC to stop reduced rates for competitors

Verizon Communications Inc. is trying to shed requirements that the telecom giant give its competitors network access at reduced rates in Greater Boston and other markets on the Eastern Seaboard.

The company has petitioned the Federal Communications Commission for "forbearance" from the rules because Verizon says competition now makes the regulated rates unnecessary. The telecom giant made the request for Greater Boston and five other US metropolitan areas.

Consumer advocates oppose the petition, and lawmakers worry that Verizon's petition is an inappropriate use of an arcane piece of telecommunications law that could set a precedent allowing companies to escape regulatory obligations. Forbearance was an escape hatch built into the 1996 Telecommunications Act, permitting providers to seek relief from regulations that have become outdated.

"The effect of granting these positions would be to usurp congressionally enacted statutes in a sweeping manner," US Representative Edward Markey said at an FCC oversight hearing last month. "I have great concerns about the effect on competition and consumers that these petitions pose."

The petition itself hinges on a piece of the 1996 act meant to foster competition. The law requires companies such as Verizon to give competitors access to portions of their network at regulated prices, because building the "last-mile" connection between a central office that routes calls and a customer, or the part of the network that connects central offices, was expensive and a barrier to competition.

Verizon argues that it is now in the public interest to scrap the requirement in the Boston, Providence, New York, Philadelphia, Pittsburgh, and Virginia Beach, Va. metropolitan areas. In Boston, cable companies provide customers a choice for phone service and the company says market forces will protect consumer interests. The petition would affect the Boston Metropolitan Statistical area, including Suffolk, Norfolk, Plymouth, Middlesex, and Essex counties, as well as Rockingham and Stafford counties in New Hampshire.

"There's a tremendous amount of competitive choice in Boston in particular," said Edward Shakin, vice president and associate general counsel for Verizon. "Competition isn't going to be hurt by removal of these" price controls. "It distorts the market; it becomes harder to build service for everyone when there are subsidized services that are priced, oftentimes, lower than our cost to do it."

The petition is opposed by the Massachusetts attorney general's office and Department of Telecommunications and Cable.

"The 'market forces' alleged are not sufficient to protect the interests of consumers," the attorney general's office wrote in a filing with state utility consumer advocates opposed to the petition.

Verizon's rivals -- including Comcast and One Communications -- also oppose the petition.

Gregory Kennan, in-house attorney for One Communications, a Waltham telecom company that provides service to businesses in 16 states including Massachusetts, said that Verizon bases its argument largely on cable companies' success in picking up residential voice customers and exaggerates the competition that exists for businesses in the Boston area.

Verizon's argument relies in part on its loss of consumer and business lines due to competition, but the key evidence -- the specific numbers -- has been redacted for competitive reasons.

In Omaha, the FCC granted a similar forbearance request that took effect in March 2006. McLeodUSA, a firm that provides service to Omaha customers by buying access to Qwest's network, last month filed a motion requesting the FCC reconsider the petition.

Bill Haas, vice president and deputy general counsel of McLeod, said that Qwest's proposed network access rates are too high, and unless a reasonable rate becomes available McLeod will exit the market, leaving more than 5,000 customers to seek a new provider. The FCC must act on the Verizon request by Sept. 6 or it will automatically be granted. The commission is most likely to grant a 90-day extension and decide the issue later this year.

Carolyn Y. Johnson can be reached at cjohnson@globe.com.