Baby Bells Lobby FCC to Keep Pact Details Secret

SBC Communications Inc. and other Baby Bells are lobbying federal regulators for permission to keep secret the deals they reach with rivals to share their local telephone networks.

Representatives from SBC and other Bell companies late this week sought help from Chairman Michael K. Powell of the Federal Communications Commission in preventing state utility commissioners from reviewing and approving the deals.

SBC, California’s dominant local phone company, argues, among other things, that releasing confidential details discourages deals from being reached.

The FCC has broadly interpreted the Telecommunications Act of 1996, passed to foster competition in local phone service, as requiring disclosure of just about any bargain the Bells reach with competitors.

But SBC contends the agency can make an exception to that requirement.

“We’re trying to ask and implore the FCC to step in and make a decision,” said SBC spokesman Selim Bingol. “We certainly believe this is an issue that is ripe for the FCC to decide.”

Under FCC phone competition rules, the Bells currently lease the equipment needed to provide phone service to rivals at regulated wholesale rates. On March 2, though, a federal appeals court threw out those rules. The FCC and the Bush administration called on the telecom industry to negotiate new lease terms and preserve local phone competition, which is saving customers $10 billion a year.

SBC did just that last month with Sage Telecom Inc., insisting that the terms remain confidential. Facing an order by Michigan regulators to file its contract with Sage by Wednesday, SBC is expected instead to file a petition with the FCC early next week. In one argument, according to sources, the Bells point to a little-used provision of the Telecom Act to say that the FCC should preempt state authority and keep new lease agreements confidential.

Critics of such secrecy don’t agree.

“The fact that that provision exists does nothing to displace the filing required by the Telecom Act,” said Brad Ramsay, general counsel for the National Assn. of Regulatory Utility Commissioners, a trade group of state regulators.

The issue could be a thorny one for Powell, who has mainly supported the Bells’ views in the past.

In March, the FCC proposed its highest fine ever, $9 million, against Qwest Communications International Inc. for failing to file 46 agreements with state regulators since 2000. Qwest also faces a $26-million fine in Minnesota, a $21.7-million fine in Arizona and a $7.5-million settlement offer in Colorado.

“As we have stated previously, we consider any filing delays to be extremely serious,” the FCC said in its March 11 order on the Qwest fine.

The idea behind the 1996 act, which is designed to end local phone-service monopolies, is to avoid discriminatory or anti-competitive behavior and check the unequal bargaining power the Bells enjoy.

Once the Qwest deals were made public, for instance, regulators found that some rivals had agreed, in return for lower rates, not to oppose Qwest’s entry into the long-distance market.

SBC and Sage have argued that their deal, the first to be reached in the current talks, contains proprietary terms about Sage’s business plans. SBC also argues that keeping terms secret will spur more deals with others.

The Bells also want to avoid a Telecom Act provision that lets competitors pick and choose the best parts among completed contracts to put in their deals.

The Bells also believe that they should be able to reach contracts like any other business. Critics point out that they still have monopoly power with more than 80% of the local lines and a fast-growing chunk of the long-distance market -- Verizon Communications Inc. said this week it had 45% of the long-distance customers in its territory.