**STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS,**

**CONCURRING**

*Re: Verizon Communications Inc. and MCI, Inc. Applications for Approval
of Transfer of Control, Memorandum Opinion and Order, WC Docket No.
05-75* (Concurring)

The mergers before us are about more than the union of this country's
largest telecommunications carriers. They are about consumers' phone
bills, the availability of competitive broadband options and the future
of the Internet. But in a sense, these mergers can also be seen as an
epitaph for the competition that many of us thought we would enjoy as a
result of the Telecommunications Act of 1996. That legislation, I am
convinced, envisioned a vastly different communications landscape than
the one we find ourselves living in today.

 

If you seek the reason why we haven't arrived at that happy valley of
competition rife with consumer benefits, you can start with the
misdirected policies of the FCC over the last several years. On too many
fronts, the Commission put the spear to the pro-competitive policies of
the Telecommunications Act of 1996. It put intra-modal competition for
the residential market pretty much beyond reach for new entrant carriers
and then proceeded to inhibit enterprise competition, too. We turned our
eyes away when enforcement was needed to keep bottleneck facilities
open. And all the while we kept singing confidently "Don't Worry, Be
Happy"---*inter*-*modal* competition is going to save us with all its
new options. Maybe, but then again maybe not---we're still waiting. I
think we ought to be concerned. Thanks in part to our actions, the
wireline market became increasingly the province of the few. More than
half of the wireless market came under the control of incumbent wireline
providers. New services like VoIP have been held back by the high cost
of broadband in this country. And now the Internet backbone seems headed
in the same direction of control by a favored few.

This state of affairs is not of my making or choosing. The record shows
that I objected vociferously to many of these changes. I would have
chosen a very different path than the one we travel today. But in the
end, we are charged with considering these mergers in the context of the
world that is, not the one that might have been.

 

In this environment, I believe my responsibility is to identify and
fight for what we can preserve, so that American consumers can still
enjoy some competition in telecom services; that business customers,
too, can benefit from competitive rates and innovative service choices
and lower prices; and that, when it comes to the Internet, we can all go
where we want to go and do what we want to do with this dynamic tool
that is so critical to our nation's future. These things are all clearly
in the public interest.

 

The Order the Commission adopts today falls far short of ideal. Maybe a
better way to put it on this Halloween Day is to say: It's not a trick
or much of a treat, but it's all you get if you come knocking at the
Commission's door today. Yet, clearly, this is better than approving
these mergers without any conditions. There have been difficult
discussions here in recent days, but they have been substantive,
productive and fair. And while I wish I could have been more persuasive
on a number of issues, we should keep in mind that this outcome is far
from a rubber stamp approval of the item we received. I would
not---could not---support an unconditioned approach. Would I have
preferred to do more? Yes. Am I entirely satisfied? No. But this Order
is now conditioned on provisions designed to address numerous possible
harms to competition and to consumers, as well as to protect the
openness and innovation that must always characterize the Internet.

 

•       *Stand-Alone DSL:* We require the Applicants to make available
stand-alone, or \"naked\" DSL. This means consumers can buy DSL without
being forced to also purchase voice service. This is good news. If savvy
consumers have cut the cord and use only a wireless phone, why should
they have to pay for wireline voice service they don\'t even want?
Looking forward, this condition is important for the development of
VoIP. I also am pleased that the Commission has committed to enforce
this condition and issue an annual report addressing anti-competitive
conduct in this market. And I hope we will have the good sense to find
it anti-competitive if the price for stand-alone DSL is not
significantly less than the price for bundled voice and DSL.

 

•       *Net Neutrality:* Two years ago I urged the Commission to ensure
that its policies protect the openness that makes the Internet such a
vibrant place. Two months ago, I pushed for this Commission to approve
an Internet Policy Statement outlining the freedoms consumers have a
right to expect in the digital age. Today, we make these principles
enforceable. As a result, consumers will have an enforceable right to
use their bandwidth as they see fit, going where they choose and running
the applications they want on the Internet.

 

•       *Internet Backbone:* The Internet's network of networks relies
on providers handing traffic off to one another. This free exchange of
traffic---known as peering---has been a hallmark of the Internet
backbone. We require the Applicants to continue peering with as many
providers as they do today. This will help prevent the network outages
that come from de-peering. It will also help ensure that the free flow
of traffic continues---and that new costs are not passed on to
end-users.

•       *Special Access:* We provide a measure of stability for
businesses and carriers that use special access services---the high
capacity facilities that so much of our communications rely on. We
freeze rates and provide some protection against discriminatory
practices. Let me note, however, that the Commission still has a
long-standing and more comprehensive proceeding on special access to
complete. It is vitally important that we do so without further delay.

 

•       *UNEs:* To keep competition growing from competitive carriers,
we require the Applicants to update the wire center test from the
*Triennial Review Remand*. We also provide stability by capping UNE
input rates for two years. 

These conditions provide only a bare minimum. I can't say we made
lemonade out of lemons, but we did the best we could. More would clearly
have been better. Surely our statutory obligation to ensure that these
mergers are in the public interest provides ample authority for the
Commission to go further than it did. In addition to the areas I just
discussed, a merger of this magnitude would seem to call for more
significant divestiture of overlapping facilities and routes, going
beyond the minimalist consent decrees that were announced last week by
the Department of Justice. But in the good faith back and forth between
my colleagues and me, these are the results we were able to achieve.
Similarly, some will argue that several of the commitments outlined
above are not in perpetuity and are not long enough. I agree.
Commissioner Adelstein and I fought long and hard for lengthier
commitments. But at least for the time periods enumerated, this becomes
official policy. Once instituted, consumer expectations may compel their
extension, and perhaps the Commission itself will come to see the wisdom
of extending them. More to the point, Congress will have the opportunity
to work its will as it revisits the telecommunications statute.

 

Going forward, our priority must be on vigilance, expert monitoring, and
enforcement as needed. This new era of telecommunication is rife with
all sorts of exciting opportunities for both consumers and
entrepreneurs. But there are also new perils. No less a source than the
*Wall Street Journal* pointed out less than two weeks ago that large
carriers "are starting to make it harder for consumers to use the
Internet for phone calls or swapping video files." The more powerful and
concentrated our facilities providers grow, the more they have the
ability, and perhaps even the incentive, to close off Internet lanes and
block IP byways. I'm not saying this is part of their business plans
today; I am saying we create the power to inflict such harms only at
great risk to consumers, innovation and our nation's competitive
posture. Because, in practice, such stratagems can mean filtering
technologies that restrict use of Internet-calling services or that make
it difficult to watch videos or listen to music over the web. The
conditions we adopt today speak directly to this issue---***before***
increased concentration of last mile facilities and the Internet
backbone make it intractable. This is why stand-alone DSL, enforceable
net neutrality principles, and peering in the Internet backbone are so
vital. 

 

I also am pleased that these conditions now express a measure of concern
for the effects of these mergers on competitive wireline providers.
Competitive carriers will benefit from the reforms we put in place for
special access and UNEs. This will provide at least some latitude for
competitive players trying to crack open an increasingly concentrated
marketplace. We need active and engaged competitive carriers to keep
rates low. This is especially important for small business customers.

 

In addition, this Order takes a cautious view of the impact of these
mergers on rural America. We share a concern that the mergers not be
allowed to jeopardize interconnection for small and rural providers. To
this end, the Commission commits to monitoring the situation on an
ongoing basis. This is important because the wrong policies here could
actually put rural America at further disadvantage compared to the rest
of the country. I, for one, will be vigilant in making sure this never
happens.   

 

Looking beyond the transaction before us, it is obvious that the whole
telecommunications landscape continues to change dramatically. But
despite all of the advances in technology and efficiency over the last
decade, local phone rates have failed to decline. Household phone
penetration is at the lowest rate in 17 years. Surely being 16^th^ in
the world in broadband penetration is nothing to crow to about. And,
yes, we still have enormous digital gaps from the inner city to the
rural village, and there is a real threat that current policies may
widen rather than close those gaps. So there are already ample warning
signs something is not right. And it is long past time for the
Commission to pay heed.

  

It may be that we can address all these concerns in a big carrier
environment. Conversely, it may be that we are tacking back in time
toward an era when concentrated power dictated what limited services we
could and could not have and we had no recourse but to accept what was
offered. In any case, I am mindful that there are large and portentous
questions here---and that their ultimate resolutions often range beyond
the boundaries of FCC jurisdiction. The Commission---important as its
work is---does not design the legal landscape for telecommunications.
Congress is looking at these issues and will hopefully be updating our
telecommunications statute in the months or year ahead---and there is no
substitute for that kind of guidance. I also believe we need some real
national dialogue on these issues regarding consumer rights, Internet
openness, broadband deployment and many more. I think we will find the
American people more than happy to engage such a discussion. They
understand that how these issues are decided is important to them. The
bottom line here is that these issues are vitally important to the
future of our country. Telecommunications are going to be a major driver
of our economy in this new century. We just have to get the legal and
regulatory landscape right. If we get it wrong, American consumers will
pay and so will American technology, innovation and entrepreneurship. No
less than our global competitiveness in the new information age is at
stake.

 

Above all, we must have some humility about what we do. There are honest
disagreements over these issues and I don't believe that any one of us
has it all figured out. So we have to be always open to new facts and
always follow up on the real-world consequences of our actions. If rates
go up for residential and business users as a result of our decision
today, if our broadband penetration rates fall further in comparison
with what other countries with different policies are experiencing, and
if consumers find that their Internet freedom is being shackled by
monopoly or duopoly control, then we have a clear and pressing duty to
revisit what we have done. So we need to put as much or more effort and
resources into monitoring the consequences of our actions as we do in
bringing them forward for a vote. I have worked in this proceeding to
protect against injurious consequences, as best I can under the
circumstances, and while I would have liked more, I will concur in these
Orders and pledge my close attention to their unfolding consequences.

  We at this table are all indebted to the work of the Bureau and to the
tireless dedication of our personal staffs as these items matured and
particularly their often heroic efforts over the past week. For my part
I want to extend my appreciation and admiration to Jessica Rosenworcel.
Her tenacity and creativity through all of this have been an
inspiration.