For Immediate Release, December 2nd, 2003 This Document Contains the Release and Backgrounder. To Read the FOIA Request   Teletruth Files FOIA With FCC To Obtain Chairman Michael Powell’s Contacts During Triennial Review’s Sunshine Period. Did The Bell Companies And Their Minions Have Undue Access And Influence Over The FCC Rule Making Process? Teletruth today filed a Freedom of Information Act (FOIA) request with the FCC to supply Teletruth and the public an accounting of Chairman Powell’s conversations, meetings, emails and other pertinent information in an effort to ascertain if the Public Interest has been harmed during the Sunshine Agenda period of the Triennial Review. Under the law, during the Sunshine Agenda period of the Triennial Review, starting February 14th, 2003 and continuing through August 20th, 2003, the FCC and staff Commissioners were not meant to have contact with outside sources, except by invitation and necessity. This includes the companies who would benefit from rules being written in their favor, as well as influence from senators, congressmen or their aides, associations, research firms or lobbying groups trying to influence the outcome. Comments and other items that have been "Sunshined" are "--- Not for staff inspection. Submission received during the Sunshine Agenda period is associated with, but not made part of the record." "We are expecting to answer the question of whether there's been a violation of the Administrative Procedure Act, APA. Was there undue influence on Chairman Powell and any of the Commissioners in the final creation of the Triennial Review’s rules?" asks Bruce Kushnick, Chairman of Teletruth. Recent revelations of a possible anti-trust probe of the Bell companies and the United States Telecom Association, USTA, for "cartel-like behavior" has only added more need for this FOIA request. (The USTA acts as the Bell companies’ primary lobbying arm.) As reported by Telecom Policy Report, a memo was sent that stated "…it is USTA’s plan to ask the manufacturing companies’ CEOs to join with USTA in meetings at the White House, on Capitol Hill, and at the FCC; to participate in press briefings at the National Press Club in Washington, D.C.; to ‘incorporate these objectives into their own corporate messaging, both internally and externally’ and to make a three-year financial commitment that would raise between $30-$40 million for lobbying efforts."(1) Have the Bells unlawfully gamed the FCC and the regulatory system by being able to attempt to manipulate the Triennial Review? The safeguards in place are to avoid "regulatory capture", where a few companies control the agenda and the destiny of the US telecommunications market. It should be noted that because of the Bell-mergers with their siblings, today, SBC, BellSouth, Qwest, and Verizon (which includes GTE) control over 90% of the essential wireline network facilities. Almost all competitors still use these same wire lines and require access to offer their own competitive service. The preliminary research has found that: There were many instances where the Bell companies or other parties who work in their favor contacted and met with the FCC during the Sunshine period. Numerous examples of phone companies or their supporters included visits, conversations, emails, presentations, etc., by Verizon, BellSouth, a letter from Congressmen Tauzin, Dingell and Upton on related competitive pricing issues, and vendors and associations including Corning and the High-Tech Coalition. We believe this is simply the tip of the iceberg of contacts that could have placed their own agenda’s over the American Public’s interests. Sunshined comments – Of the 650+ comments during the Sunshine period, about 90% were sunshined, meaning ignored. The overwhelming majority of those sunshined were from Teletruth and others who alerted customers that the proposed laws would stop line sharing and give the four Bell companies exclusive use of customer-funded fiber-based phone networks. None of these sunshined persons or Teletruth were invited to meet to discuss the impacts of these laws, even though our filings clearly showed that the Triennial rules would harm any customer who wishes to utilize a competitive DSL service using line sharing, which is the ability of a customer to use the same phoneline for voice calls as well as DSL. The rules that were voted on Feb. 20th were only draft rules. Both Commissioners Copps and Adelstein pointed out that the rules that they were voting on lacked adequate details. In various cases, these rules were substantively changed when the final rules were announced. From the draconian decision to increase the costs of line-sharing 75% in three years, to a critical definition of the term "fiber-to-the-home", where the word "residential" was removed in a post-decision ‘errata’, it is clear that these decisions were not changed in favor of the Public Interest. To see some of the details, a copy of the FOIA, or more information about the Triennial Review, go to http://www.teletruth.org/foia.html or contact Bruce Kushnick at 212-777-5418 or brucekushnick@teletruth.org Details About Our FOIA Request The Draft Rules Were Voted On Prematurely. Teletruth’s first concern stems from the fact that the rules which were presented on February 20th, 2004 were more like clay than of a finished statue, and that undue influence could have been used to make these decisions go in favor of the Bell companies and not customers, competitors or the Public Interest. Commissioner Copps stated that he was unable to fully sign on to these decisions because "the devil is… in the details" while Commissioner Adelstein said that they were voting on the rule "before we have seen a draft" and that "…this is especially troubling to me on issues of this magnitude"." Commissioner Michael J. Copps (2) "Although the bottom lines have been decided, the devil is more often than not in the details. I am unable to fully sign on to decisions without reservations until there is a final written product. As we finalize the draft in the coming days, I hope all of the agency’s resources will be working towards implementing the majority opinion on all aspects of the Order so that it can withstand the inevitable litigation that is sure to follow. If we do not dedicate all our resources to perfecting this Order, we will be vulnerable to the accusation that we are throwing up our hands and expecting the courts to step in. That’s not good government."   Commissioner Jonathan S. Adelstein (3) "We are voting on this item before we have seen a draft reflecting the latest cuts. This is especially troubling to me on issues of this magnitude. The lights were burning brightly on the eighth floor late last night, and offices reached some agreements on major issues at the eleventh hour – and I mean that literally, around 11:00. So we understandably haven’t yet had the opportunity to review all the language reflecting those cuts. In no way do I want to suggest that the Bureau staff has fallen short by noting the fact that language reflecting late agreements among commissioners is not yet drafted. But I am very uncomfortable voting on this item before the offices have seen the draft order, because as we all know, the devil is in the details."  There Were Harmful Changes in the Rules and Their "Details". How harmful are the details? In the original draft, there is only a vague discussion of the price of service for competitors who use line sharing. (4) "…during each year of the transition, the price for the high-frequency portion of the loop will increase incrementally towards the cost of a loop in the relevant market." However, by the final rule, during the third year of transition, the price increases 75%, which means that these increases will simply put the companies who are selling these services out of business because the prices will simply not be competitive. "3) Beginning two years plus one day after effective date of the Commission’s Triennial Review Order until three years after that effective date, the incumbent LEC shall provide access to the high frequency portion of a copper loop at 75 percent of the state-approved monthly recurring rate…" Had the public heard this major point, that the FCC was increasing prices 75% for the same service, they might have been more outraged before this law went through. Similarly, there was a late "errata" change to the entire fiber optic future that was done on Sept September 17, 2003, weeks after the law was already supposed to be law. The FCC issued an ‘errata’, which was supposed to fix small details in the original documents. Examples are minor details of making an "s" lower case, or capitalizing the first letter in the word "order". (5) "3. In paragraph 26, in the third sentence, we replace "LECS" with "LECs." "4. In paragraph 31, in the first sentence, we capitalize the first letter of the word "order." But notice this major change from the original rules, which discussed fiber-to-the-home. The original rules clearly state that these are going to "residential" customers. "(3) Fiber-to-the-home loops. A fiber-to-the-home loop is a local loop consisting entirely of fiber optic cable, whether dark or lit, and serving a residential end user’s customer premises." (Emphasis added) "(i) New builds. An incumbent LEC is not required to provide nondiscriminatory access to a fiber-to-the-home loop on an unbundled basis when the incumbent LEC deploys such a loop to a residential unit that previously has not been served by any loop facility." (Emphasis added) However, number 37 and 38 of the errata redefine the entire obligation of the Bell companies by removing the word "residential" in the rules related to fiber-to-the-home to "end user’s customers premises", which could be any business. "37. On page 13 of Appendix B listing the final rules, we delete the word ‘residential’ in section 51.319(a)(3). (Emphasis added) "38. On page 13 of Appendix B listing the final rules, we replace ‘residential unit’ with ‘end user’s customer premises’ in section 51.319 (a)(3)(i)." (Emphasis added) This is a major change in meaning that was obviously added by the Commission through the help of the Bell companies. The Bells will no longer have the stated obligations to residential customers and can focus on the more nebulous "end-user", which can refer to any business. It is the Bells, not customers, who gain from the change. --- Residential customers have been deleted and replaced. Who Got Heard and Was Invited? --- It Was Not "Us". In all of the ex parte filings, neither Teletruth nor any of our members or affiliates were contacted to meet with the FCC over our own concerns. It should be noted that Teletruth’s Comments were given special notice in the Triennial Review because of our objections that the FCC procedures were violating various laws. This included violating the mandate of the small business Executive Order Number 13272 and the Regulatory Flexibility Act, both designed to make sure that the Federal agencies take into account small business concerns when creating new laws. Our concerns were independently echoed in a letter and Comments made by the Small Business Administration’s Office of Advocacy, who was also not invited to meet with the Commissioners about the harm the Triennial would have on small independent Internet Service Providers (ISP), Competitive local phone companies (CLECs) and the small businesses of America who rely on these companies for innovative services. Of the 650+ comments, 90% were sunshined --- and virtually 95% of those sunshined were from the Teletruth campaign. An Example of a Sunshined Comment Proceeding: 01-338 Type Code: CO Date Received/ 02/14/03 Total Pages: 1 Filed on Behalf of: XXXXXX Complete Mailing Address: XXXXXX Bethesda, MD XXXXX This submission has a status of 'Sunshine' - Not for staff inspection. Submission was received during the Sunshine Agenda period, and is associated with, but not made part of the record. (Note: This appears at the bottom of Sunshined comments.) Examples of Meetings and Presentations Made to the FCC During the Sunshine Period. The following are just a few ex parte letters regarding meetings that occurred with the FCC, the Bell companies and related concerns. It is by no means a compete list. Although some of these meetings were most likely legitimate or on related topics, it suggests that the Bell companies had access to the Commission during a critical period in the final rulemaking process, while everyone else was ignored. Verizon, March 19, 2003, Ex Parte Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, CC Docket No. 01-338; Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98; Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147 Yesterday, S. Guyer and M. Glover of Verizon met with C. Libertelli of Chairman Powell’s office to respond to questions in the above-referenced dockets concerning interconnection change of law provisions Corning, May 5th, 2003, Ex Parte Re: Ex Parte Letter in CC Docket No. 01-338Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers In reference to the above captioned docket (CC Docket No. 01-338), I was invited by Emily Willeford, Special Assistant to Commissioner Martin, to submit the attached information on definitions for dark fiber, fiber-to-the- home, and other fiber-related topics. Verizon, July 17, 2003, Ex Parte Re: Verizon Petition for Forbearance, CC Docket No. 01-338 Yesterday, Verizon had a conference call with J. Carlisle, M. Carey, T. Navin and P. Arluk of the Wireline Competition Bureau. M. Glover, E. Shakin, A. Berkowitz and I represented Verizon. The positions presented by Verizon were consistent with those filed in the above Petition in regards to Section 10D of the Telecommunications Act.   Verizon, July 24, 2003, Ex Parte Re: Verizon Petition for Forbearance, CC Docket No. 01-338 Dee May and Ed Shakin of Verizon met with Chris Libertelli of Chairman Powell’s office to discuss the above Petition. The handout provided to Mr. Libertelli is attached. The positions presented by Verizon were consistent with those filed in the above Petition in regards to Section 10D of the Telecommunications Act. Verizon, May 19, 2003, Ex Parte Re: UNE Triennial Review Proceeding, WCB Docket Nos. 01-338, 96-98, 98-147. On May 16, 2003, Michael Glover and I representing Verizon met with Commissioner Martin, Dan Gonzalez and Emily Willeford from Commissioner Martin’s office. In response to a question from Commissioner Martin, the Verizon representatives responded to Covad’s recent proposals to reconsider or modify the Commission’s decision with respect to line sharing. High Tech Coalition, February 14, 2003, Ex Parte (This meeting was technically before the Sunshine date, but filed during the period.) Re: In the Matter of Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, CC Docket No. 01-338; Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98; Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147 On February 13, representing the High Tech Broadband Coalition (HTBC), Daryl Hatano, David Peyton, Veronica O.Connell, Peter Pitsch, Grant Seiffert, Tim Regan, Doug Wiley, Doug Cooper and the undersigned met with Commissioner Kevin Martin, Daniel Gonzalez and Emily Willeford regarding the above referenced proceedings. During the meeting, HTBC again stressed the extreme importance of fundamentally reforming the unbundling rules to create strong incentives to deploy new, last mile broadband facilities. An Example of Cause and Effect – The Errata Change? How did this change in the ‘errata’ come about, which allowed the definition of the term fiber-in-the-home go from "residential" customers to nebulous "end users"? Teletruth speculates that the High Tech Coalition, who back the Bell companies’ proposed plans, may have been able to influence the regulators --- the change directly benefiting the Bells. On September 25, 2003, the High Tech Coalition filed an Ex parte stating that at the Feb. 13th meeting, a follow up presentation was delivered that expressly states the "…capability during construction of new broadband facilities; ensuring that all of the afforded broadband regulatory relief in fact reaches the mass market, that is small businesses and multiple dwelling units in addition to residential customers…" This indicates that this specific change was instigated through discussions with the High Tech Coalition, as well as follow up materials. (Emphasis added) Letter from High Tech Coalition, September 25th, 2003 Re: In the Matter of Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, CC Docket No. 01-338; Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98; Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147 On February 13, representatives of the High Tech Broadband Coalition (HTBC) met with the following members of the staff of the Wireline Competition Bureau: Chief William Maher, Tom Navin, Brent Olson, Marcus Maher, Michelle Carey, and Jeffrey Carlisle. The HTBC representatives were Grant Seiffert, John Boidock, Doug Cooper, Peter Pitsch, Tim Regan and the undersigned. The HTBC representatives commended the staff for producing a report and order in the above-captioned proceeding that fundamentally reforms the unbundling rules by restoring to all carriers the incentive to invest in and deploy new, last mile broadband facilities. In the course of the meeting, the discussion included interpretations of several issues raised by the HTBC representatives: any unbundling requirements under Section 271 should not apply to the broadband facilities that are deregulated in the Order under Section 251; confirmation that incumbents do not have an obligation to install TDM capability during construction of new broadband facilities; ensuring that all of the afforded broadband regulatory relief in fact reaches the .mass market,. that is small businesses and multiple dwelling units (MDUs) in addition to residential customers; including in the complete exclusion from the unbundling requirements .green field. fiber-to-the-curb (FTTC) deployments that provide capabilities truly comparable to those provided by fiber-to-the-home (FTTH) loops; regulatory treatment of .dead fiber. in a central office and incumbent carrier designation as to whether such fiber is intended for use in either mass market fiber-to-the-premise or enterprise deployments. Pursuant to Section 1.1206 of the Commission's Rules, 47 C.F.R. § 1.1206, a copy of this submission is being provided to the Commission staff present at the meeting." (Emphasis added) Note: Another letter was dated September 25 with the same language except: On September 24, representatives of the High Tech Broadband Coalition (HTBC) met with the following members of the staff of the Wireline Competition Bureau: Chief William Maher, Tom Navin, Brent Olson, Marcus Maher, Michelle Carey, and Jeffrey Carlisle. The HTBC representatives were Grant Seiffert, John Boidock, Doug Cooper, Peter Pitsch, Tim Regan and the undersigned.   Endnotes 1, "USTA, Bells Face Possible Antitrust Probe, Competitors Press Congress To Investigate 'Cartel-Like' Behavior", Telecom Policy Report Nov. 5, 2003, Vol. 1 No. 29 2. Press Statement Of Commissioner Michael J. Copps, Approving In Part, Concurring In Part, Dissenting In Part Re: Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Feb. 20th, 2003 3.Separate Statement Of Commissioner Jonathan S. Adelstein Approving In Part, Concurring In Part, Dissenting In Part Re: Review Of Section 251 Unbundling Obligations Of Incumbent Local Exchange Carriers, Feb. 20th, 2003 4.Triennial Review, August 20th, 2003 5.ERRATA, Adopted: September 16, 2003 Released: September 17, 2003, FCC 03-227 6.See our filings at: http://www.teletruth.org/FOIA.html