Is Verizon Violating Court Orders?

e.spire and others say that Verizon is not paying overdue reciprocal compensation bills even though the Maryland Public Service Commission and the U.S. Bankruptcy Court ordered it to pay up.

by Roy Mark of dc.internet.com [November 12, 2001]

e.spire Communications, Inc. (NASDAQ:ESPIQ), the bankrupt local broadband provider that is attempting to successfully reorganize it finances under Chapter 11 protection, has filed two complaints against Verizon (NYSE:VZ) charging that it has failed to pay millions of dollars of bills in violation of orders issued by the Maryland Public Service Commission and the U.S. Bankruptcy Court.

The first complaint, before the Maryland Commission, claims Verizon is not complying with a June order of the Maryland Commission requiring Verizon to continue to pay reciprocal compensation bills in Maryland in the wake of a recent order of the Federal Communications Commission. The Maryland Commission found that Verizon must continue to pay such bills until it signs new amendments to its interconnection agreements.

Verizon and e.spire are still negotiating an amendment, but Verizon continues to withhold payment.

The Maryland Commission has already ordered Verizon to pay Core Communications and all other competitors in Maryland.

WorldCom, Inc. has also filed a complaint, asking the Commission to levy $25,000 per day in penalties for Verizon's failure to pay similar WorldCom bills.

In the e.spire complaint, the company has asked the Commission to delay Verizon's Maryland application to re-enter the long distance market until it can demonstrate 18 consecutive months of complying with the Commission's local competition orders.

"Verizon just doesn't get it. It thinks e.spire should make payments to Verizon, but Verizon is above the law and doesn't have to pay for services rendered by e.spire," said James C. Falvey, e.spire senior vice president of regulatory affairs. "It seems to think it can ignore the Maryland Commission. What Verizon is really trying to do is force all competitors out of the market so it can continue to run its monopoly."

In the second complaint, filed in Bankruptcy Court in Delaware, e.spire charges that Verizon has failed to pay a total of $2.6 million in overdue payments to e.spire. Verizon, however, maintains that e.spire owes money to Verizon. e.spire says an internal company audit determined that Verizon had lost and misplaced checks made by e.spire, and returned checks to e.spire without explanation. The e.spire audit determined that e.spire payments were, in fact, current.

"Verizon's billing department is in disarray, and Verizon is trying to place blame for its own confusion on e.spire," said Christopher J. Resavy, e.spire's chief operating officer. "It's just another example that shows that monopolist phone companies are afraid of competition and are trying to keep new entrants out of the telecom market. Our message is simple: pay your bills to e.spire, or answer to the court."

e.spire filed for bankruptcy in March, saying it could not generate enough revenues to finance its $980 in debts. The competitive local exchange carrier claimed it was facing debt payments of $120 million a year if it did not seek bankruptcy protection.

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