Press Release

HARRISBURG -- The Public Utility Commission (PUC) today outlined proposed rules to safeguard telephone competition by prohibiting local telephone companies from using their market power to unfairly favor or promote their own retail services over those of their competitors.

"Since 1993, Pennsylvania has been a leader in telecommunications competition and I believe that we can maintain that status," said PUC Chairman Glen R. Thomas. "Furthermore, our past experience indicates that consumers benefit from competition.

"The transition to competition in the local phone markets requires the development of competitive safeguards to ensure that new entrants will have a fair and equal opportunity to compete for customers.

"The proposed regulations will provide a comprehensive set of competitive safeguard rules to prevent unfair competition, discrimination, cross subsidies and other market-power abuses by local telephone companies."

Competitors often lease components from a local phone company’s network at wholesale prices and then resell a bundled package of services, such as basic dial tone, call waiting and voice mail, to retail customers. Local phone companies also sell the same services to retail customers. Today’s proposed code of conduct lays out acceptable business practices to ensure that local phone companies provide competitors with non-discriminatory access to services and facilities.

For example, because local phone companies own the networks, their employees install all equipment and make service repairs, even for customers who have opted to buy a competitor’s service. Under today’s proposed rules, a local phone company employee who is repairing service on behalf of a competitor would be prohibited from telling the customer that service would have been repaired sooner had the customer stayed with the local phone company.

The proposed code of conduct also would bar local phone company employees from sharing with their marketing division proprietary customer information they received when accepting orders for a competitor. This would prevent marketing and sales employees from using the information to undercut a competitor’s prices and win back a customer.

Also, a local telephone company would be prohibited from making marketing claims that its products are superior to a competitor’s, unless the statements could be factually supported.

Finally, the proposed code of conduct would prevent a local telephone company from unlawfully using revenues or expenses of its noncompetitive services to subsidize or support its competitive services.

The PUC today also asked for comments on its determination that there is not a need, at this time, to functionally separate all of Verizon’s employees and facilities into wholesale and retail divisions, because both the Commission and the Federal Communications Commission (FCC) have concluded that Verizon is providing non-discriminatory access to its competitors.

Today’s action was unanimously approved by the Commission on a motion by Commissioner Fitzpatrick.

In the motion, Fitzpatrick said "it is not necessary to require Verizon to separate all of its employees and facilities into wholesale and retail divisions because the Commission and the Federal Communications Commission have concluded that Verizon’s local market is open to competition. This would be an intrusive remedy designed to fix a problem that has not been shown to exist.

"We concluded in Verizon’s proceeding to enter the long-distance market that it was providing wholesale services in a non-discriminatory manner, and the FCC agreed."

Fitzpatrick also noted that Verizon is subject to a performance assurance plan containing self-executing penalties, and could pay up to $183 million per year for failing to meet performance standards.

The proposed regulations will be published in the Pennsylvania Bulletin, and parties will have 30 days from the date of publication to submit comments to the PUC.

The PUC ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition.