SBC Resists Release of Pact

SBC Communications Inc. on Friday rebuffed an order from California regulators to disclose a leasing contract it recently negotiated with a small competitor, setting up a showdown over whether regional Bell phone companies must publicly divulge the deals they are making with rivals.

SBC and Sage Telecom Inc. are chafing under a provision of the Telecommunications Act of 1996 that requires the Bells to reveal the contracts they are inking to share their lines and equipment -- agreements they are required by law to make to help boost competition for local phone service.

SBC has said that disclosure would weaken its bargaining position as it tries to strike other such agreements. For its part, Sage contends the contract contains proprietary information about its business plans and should remain confidential. Sage operates in 11 of the 13 states where SBC is the dominant local service provider.

The Federal Communications Commission and the Bush administration are prodding the Baby Bells and their rivals to agree on leases by June 15, a deadline set by a federal appeals court that threw out the FCC’s latest phone competition rules last month.

The five commissioners are split over whether to seek Supreme Court review. Instead, they want the industry to settle its own differences.

The Telecom Act, which was designed to break up local phone service monopolies, states that interconnection agreements between the Bells and their rivals must be filed in their entirety with state regulators for review and approval.

That provision is aimed at ensuring the Bells don’t discriminate against other rivals to the detriment of the public, and that the contracts aren’t anti-competitive. “The Bells have some form of market power that has to be restrained,” said James Lewis, MCI Inc.’s vice president of global policy, who asserted that the SBC-Sage agreement should be disclosed.

The Sage deal, signed this month, prompted the state Public Utilities Commission on Wednesday to ask that the contract be sent to the agency for its approval. The PUC is the first state agency to force the issue.

SBC told state regulators in a letter Friday that its accord with Sage contained terms that were not subject to the provisions of the Telecom Act. Therefore, California’s dominant local phone firm said, it didn’t have to file the contract with the agency.

However, the company said, it would make some of the terms public by filing amendments to a previously filed interconnection pact with Sage.

“The agreement is a commercial arrangement that was not negotiated” under the Telecom Act, SBC said in the letter. The company, based in San Antonio, also asked for a meeting to discuss the issue with the agency.

Industry leaders questioned whether SBC’s logic would fly.

“It seems the [FCC] has been fairly consistent with requiring the filing of all terms and conditions, not just part of them,” said former FCC Commissioner Harold Furchtgott-Roth.

Should the PUC continue with its demand, SBC could ask federal regulators to step in. But whether the FCC would do so -- and with whom it would side -- is uncertain.

Qwest Communications International Inc. is facing a $9-million federal fine for failing to disclose 46 deals dating to 1999, though it now is making public all wholesale leases it signs for its 14-state territory. For example, the company plans to post on its website a contract reached last week with high-speed Internet access provider Covad Communications Group Inc.

When it comes to SBC, “it’s hard for me to imagine that the FCC would take a different view than the one reached in the Qwest case,” said Furchtgott-Roth.