January 28, 2002 -- Competitive carriers are disappointed and concerned about a Pennsylvania Public Utility Commission (PUC) tentative order that imposes a $199,000 penalty on Verizon for noncompliance with a Commission order. The Competitive Telecommunications Association (CompTel) urged the PUC to do more to ensure that Verizon follows PUC rules intended to prevent anti-competitive practices.

The PUC's tentative order absolves Verizon of guilt in connection with an egregious ad campaign the company ran in Pennsylvania beginning in Fall 2000 in connection with a PUC decision to structurally separate Verizon's wholesale and retail units. The tentative order also absolves Verizon of any wrongdoing with respect to its failure to submit evidence ordered by the Commission in proceedings on structural separation. The tentative order requires Verizon to pay a nominal fine of $199,000 for more than a year's delay in informing its employees of new PUC rules. The rules, known as a code of conduct, were established by the PUC to prevent Verizon's wholesale unit from favoring Verizon's retail unit over competitors in the provision of network facilities.

"The PUC's decision signals an unwillingness to impose meaningful penalties on Verizon," said H. Russell Frisby, Jr., president of CompTel. "For competition to develop in Pennsylvania, the commission must demonstrate a commitment to enforcing its decisions. A $199,000 penalty provides little incentive for Verizon to open its market. It's just the cost of doing business."

Last year, Verizon conducted an aggressive radio, television and print ad campaign, making outrageous claims concerning the cost and other impacts of the PUC-ordered structural separation. In March 2001, former PUC Chairman John Quain issued a statement calling for a PUC investigation into Verizon's "campaign of misinformation" on structural separation. "Verizon's campaign, which is based on exaggerated fears rather than facts, is clearly contrary to the public interest and the development of technology in and for the residential and business communities served by Verizon," Quain said. "Further, the erosion of public confidence and the creation of public alarm has not been the result of any action by this Commission. These consequences are the results of Verizon's own actions."

Then PUC Commissioner Nora Mead Brownell issued a similarly harsh critique of Verizon's ad campaign, saying, "A great disservice has been done to ratepayers, public policy makers and employees with a campaign of misinformation and intimidation."

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