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State PUC To Force Resale Discount on Telephone Companies

The corporate shell game played by incumbent local exchange carriers may be coming to an end in the coming weeks.

The Connecticut Department of Public Utility Control issued a draft decision this week that forces Southern New England Telecommunications Corp to resell its advanced services at a 24.5 percent discount.

According to Audrey Honig, SNET spokesperson, the telco plans to challenge many of the items found in the PUC's decision.

"We are evaluating a lot of different areas and we'll most likely be filing written exceptions next week," Honig said.

In 13 days, the draft will be finalized, and PUC officials don't expect it to change much.

Beryl Lyons, PUC spokesperson, said Thursday's decision is a good look at what it will look like on May 24, when the decision is finalized.

"Draft decisions always go though some final minor changes, but never 180 degrees," Lyons said.

If passed as is, SNET has until May 31 to publish new tariffs giving competitive local exchange carriers (CLECs) in the state a 25 percent discount to resell advanced telephony services like frame relay, ATM and digital subscriber line services.

SNET, a subsidiary of SBC Communications, has until now avoided the resell issue, saying it can't provide advanced services because it doesn't have any advanced services to sell. Which, in a strictly technical sense, it doesn't.

When SBC acquired SNET, one of the strictures by the Federal Communications Commission was that all advanced services combine under another SBC subsidiary: SBC Advanced Solutions Inc. That way, SBC would handle the straightforward telephone business and SBC ASI, ostensibly a separate entity, would handle the Internet side of the business.

In a statement to the PUC earlier this year, SNET wrote:

"Given that (SNET) owns no ADSL assets, has no ADSL customers, and has never offered ADSL service to Connecticut customers, the Telco concludes that there is no legal or factual basis for imposing a resale obligation on the Telco."

The ASCENT decision however, an appeal in the courts that challenged the FCC's policy to exempt advanced services affiliates (like SNET) from resale and unbundling obligations, played an instrumental part in the PUCs decision.

Many competitive local exchange carriers (CLECs) found it ludicrous SBC could avoid unbundling and resale provisions of the Telco Act by saying its subsidiary had no connection to the parent company.

In the court's decision on Jan. 9, 2001, judges found it unlikely that "that a wholly owned affiliate providing telecommunications services with equipment originally owned by its incumbent local exchange carrier (ILEC) parent, to customers previously serviced by its ILEC parent, marketed under the name of its ILEC parent, should be presumed to be exempted from the duties of that ILEC parent."

SNET, and SBC by extension, challenge the courts assertations, and have filed an appeal to the appeal, which could find its way to the halls of the Supreme Court.

A day after the decision was handed down, DSL.net Inc., a high-speed Internet provider filed with the Connecticut PUC to force SNET into provide discounted resell services.

Keith Markley, DSL.net Inc. president and chief operating officer, said SNET's objections come as no surprise to anyone in the state.

"Really, it's a situation around what I would call ongoing resistance by Bell companies to give access to advanced services on a discounted basis," Markely said.

DSL.net only filed in Connecticut, Markley said, because of financial and operational considerations. The decision, when it take effect, applies only to resale services in the state. He thinks the draft decision today should encourage others to take up the issue in other states.

"We believe the decision will foster competition and broaden the availability of advanced services in Connecticut," Markley said. "I anticipate additional state Commissions across the country will follow the lead of Connecticut regulators in clarifying and endorsing the Court's actions."



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