IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
UNITED STATES OF AMERICA, )
)
Plaintiff, )
v. ) Civil Action No.
) 1:05CV02102 (EGS)
SBC Communications, Inc. and )
AT&T Corp., )
)
Defendants. )
____________________________________)
)
UNITED STATES OF AMERICA, )
)
Plaintiff, )
v. ) Civil Action No.
) 1:05CV02103 (EGS)
Verizon Communications Inc. and )
MCI, Inc., )
)
Defendants. )
____________________________________)
VERIZON’S OPPOSITION TO MOTIONS OF THE NEW JERSEY DIVISION
OF RATE COUNSEL AND NATIONAL ASSOCIATION OF STATE UTILITY
CONSUMER ADVOCATES TO INTERVENE
Two groups purporting to represent the interests of consumers have sought leave
to intervene in this proceeding without any legitimate explanation for the untimeliness of
their motions. On July 19, 2006, the New Jersey Division of Rate Counsel (formerly the
New Jersey Ratepayer Advocate) filed a motion to intervene “in order to present the
views of a state consumer advocate” and “to present the expert opinions of Susan M.
Baldwin and Sarah M. Bosley upon which the Ratepayer Advocate relied in its
preparation of comments and briefs that were filed with the Federal Communications
Commission (“Commission” or “FCC”) and with the New Jersey Board of Public
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Utilities.” On July 20, 2006, the National Association Of State Utility Consumer
Advocates (“NASUCA”) filed a motion to intervene in order to “have entered into the
record NASUCA’s submissions that were included in the record of the Federal
Communications Commission (‘FCC’) review of these merger applications,” and to offer
their expert, Dr. Lee Selwyn, to appear before the Court “to address, as best he can, any
questions that the Court may wish to ask about the procedural, substantive or
constitutional issues” at stake. Both motions suffer from multiple flaws and should be
rejected.
1. The movants seek permissive intervention pursuant to Fed. R. Civ P. Rule
24(b)(1) (“when a statute of the United States confers an unconditional right to
intervene”). The Tunney Act does not confer such a right to intervene. See, e.g., United
States v. Microsoft Corp, No. 98-1232, 2002 U.S. Dist. Lexis 26551 (D.D.C. Feb. 28,
2002); Massachusetts School of Law at Andover, Inc. v. United States, 118 F.3d 776, 780
n.2 (D.C. Cir. 1997). While movants do not seek leave under Rule 24(b)(2), they cannot
meet that test either because, at this late stage, they cannot demonstrate that their
intervention will not cause undue delay. See Massachusetts v. Microsoft Corp., 373 F.3d
1199, 1234 (D.C. Cir. 2004). The New Jersey Rate Counsel offers no explanation for its
failure to seek leave before now and cannot claim it lacked notice; they “participated
extensively” in the merger proceedings below. N. J. Rate Counsel at 3. NASUCA’s
excuse – that it did not think this Court’s review would “justify diverting additional and
time and effort to these mergers” – is difficult to credit given that it merely seeks to file
existing pleadings and that its expert has agreed to appear “pro bono.” NASUCA at 2-3.
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Movants offer nothing germane or useful to the Court. The documents they seek
to provide the court, previously submitted to the FCC and state commissions, do not
address the Local Private Line market that is the subject of the government’s complaint.
The briefs and testimony they offer deal exclusively with competition in the mass-
market, which is not at issue here and can only distract from the inquiry actually before
the Court. (Both movants also seek to introduce comments regarding a merger that is not
at issue here – AT&T/BellSouth – and which the government has not even finished
reviewing.) Expanding this proceeding to include these latecomers, with their extraneous
issues, would be unfairly and unduly prejudicial to the parties.
2. As this Court stated at the July 12 hearing, the sole remaining issue for the
Court to resolve is whether the government’s proposed final judgment provides a
meaningful remedy for the harm alleged in its complaint. The Court said it will “consider
those same factors that the parties have considered and then make determinations of fact
and law that either the proposed final judgment addresses and resolves issues raised by
the complaint in a manner that’s consistent with the public’s interest or not.” July 12,
2006 Hearing, Tr. at 9. The movants are not qualified to assist the Court with this
inquiry. They were not involved in, and thus lack familiarity with, the detailed process of
analyzing the transactions and of developing the targeted remedy. As noted, movants and
their experts limited their analysis in the proceedings below to mass-market competition.
They accordingly have no basis to give opinions on how the remedy addresses the harm
identified in the complaint. Movants clearly wish that the government had filed a
different complaint directed to different issues, in particular the mass market. But this
Court has made clear that it has “no desire whatsoever to redraft the complaint or require
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the government to redraft the complaint to address concerns of others at this point.” Id. at
60.
3. The movants are also asking this Court to impose a remedy that is contrary
to antitrust and regulatory law, and also contrary to the public interest. They want the
Court to require the defendants to provide other carriers with the “Unbundled network
element platform (‘UNE-P’) at total element long run incremental cost (‘TELRIC’)
rates.” N.J. Rate Counsel at 7; see also NASUCA, attachment 2 (providing hyperlink to,
among other things, NASUCA’s brief at the FCC where they requested as the first
condition that Verizon provide UNE-P at TELRIC rates). “UNE-P at TELRIC rates” is
industry jargon for a forced sharing arrangement whereby defendants are required to
resell their service to non-facilities-based providers at rates below retail prices.
The Supreme Court has held that forced sharing arrangements like the UNE-P
could not be imposed under the antitrust laws even in a litigated case. In Verizon
Communications v. Law Offices of Curtis Trinko, 540 U.S. 398 (2004), the Supreme
Court rejected an antitrust claim against Verizon specifically seeking to impose forced
sharing arrangements of this sort.
The UNE-P regime is an unsound proposal even under general regulatory law.
Until late 2004, the FCC required Verizon and other local exchange carriers to provide
these UNE-P arrangements to competitive carriers. In August 2004, the D.C. Circuit
rejected the FCC rules requiring these arrangements. See United States Telecom Ass’n v.
FCC, 359 F.3d 554, 568-71 (D.C. Cir. 2004). On remand, the FCC acknowledged that it
could no longer require the UNE-P consistent with the requirements of the
Telecommunications Act of 1996. See Order on Remand, Unbundled Access to Network
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Elements; Review of the Section 251 Unbundling Obligations of Incumbent Local
Exchange Carriers, 20 FCC Rcd 2533, ¶ 204 (2005). The FCC further acknowledged
that its UNE-P requirements had not only failed to promote competition, but had actually
resulted in “investment disincentives” that were contrary to the public interest. Id. ¶ 218.
The movants here appealed that determination and lost. The D.C. Circuit rejected their
claims and upheld the FCC. See Covad Communications v. FCC, No. 05-1095 (D.C. Cir.
June 16, 2006).
In sum, the movants and their proposed experts are advocating the reincarnation
of a regulatory regime that the courts and the FCC have rejected. They accordingly will
not be helpful to the Court on the issue actually presented here. Although the Tunney
Act gives the Court wide discretion in gathering information to conduct its review,
permitting the movants to intervene would be an abuse of that discretion.
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CONCLUSION
The Court should deny the motion.
Respectfully submitted,
John Thorne
David E. Wheeler
Verizon Communications Inc.
1515 N. Courthouse Road
Arlington, Virginia 22201
Telephone: (703) 351-3000
Facsimile: (703) 351-3670
July 20, 2006
/s/ Mark C. Hansen_____________
Mark C. Hansen
Aaron M. Panner
Evan T. Leo
Kellogg, Huber, Hansen, Todd,
Evans & Figel, P.L.L.C.
1615 M Street, N.W., Suite 400
Washington, D.C. 20036-3209
Telephone (202) 326-7900
Facsimile (202) 326-7999
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