Summary of Evil RBOC Campaign

Sue Nord, Sr. Director
Government Affairs
713 345-4196

----- Forwarded by Sue Nord/NA/Enron on 05/24/2001 04:53 PM -----

Scott Bolton@ENRON COMMUNICATIONS
05/23/2001 08:47 PM

To: Sue Nord/NA/Enron@Enron
cc: Stephen D Burns/Corp/Enron@Enron
Subject: Summary of Evil RBOC Campaign

Sue, per our discussion earlier, I wanted to outline the latest on
Tauzin/Dingell and the UNE proceeding at the FCC. Over the past 2 days,
Steve and I met with the staff of Sen. Wyden, Sen. Cantwell, Rep. Largent,
Rep. Markey, and with Rep. Boucher. Additionally, we attended an RGA forum
on "broadband deployment" presented by Verizon and ATT, and met with reps
from Comptel. We also spent some time (off the clock) with Aileen and
Johnathan Hintzman w/ KDW. From all of these sources, we came up with the
following observations/takeaways:

The RBOCs have a very expensive, sophisticated campaign in place to reduce
access to their high-speed networks (it is now generally accepted that this
is the main thrust of their effort - not sec.271 relief for data),
This campaign has several facets - the Tauzin/Dingell bill, UNE Petition at
the FCC, delay/refusal of UNE provisioning to CLECs. The campaign's main
themes are that the '96 Act was only to open local networks for voice
competition, regulatory relief is needed for telcos to compete w/ cable
monopolies, CLEC business plans are unsound unless they are facilities-based,
and only use UNEs as a transitional method of entry,
Both the UNE Petition and the T/D Bill would effectively prevent the
unbundling of ILEC network elements that are classified as "High-speed" or
"broadband" - meaning wholesale access to any UNE beyond narrowband voice
facilities would be denied.
Tauzin/Dingell is now on referral to the House Judiciary Cmte. Judiciary has
a relative short time to examine the bill (they were only referred the 271
provision, not the whole legislation) and will then report the bill out with
or without amendment,
According to Rep. Boucher, the anti-trust language of the Cannon/Conyers
amendment (which would make unbundling/interconnection complaints against
ILECs an automatic anti-trust violation) will not likely survive a full cmte
vote and he believes the bill will go back to Commerce with little change,
Rep. Largent's office told us that they have not developed a floor strategy
yet to attempt to defeat T/D when it gets to the full House, but they expect
the final vote to be bitter and very close (probably in favor).
Our meetings with the Senate suggested that they are not likely to take up
T/D. We believe that is still the case, especially in a Democrat-controlled
Senate (which should be determined very soon). This would make Sen.
Hollings, an ATT ally, Commerce chairman,
On the regulatory side, Comptel and KDW were both taking the UNE Petition
very seriously,
Neither Steve nor I are confident that Comptel will carry a very effective
argument this time - they are pursuing economic and network data that, in the
end, will not make a convincing argument and will not have significant buy-in
from other Comptel members. Their focus on backbone network maps, IRUs, and
deconstructing the USTA competition report is not constructive,
KDW is leading a group of small CLECs and has invited our participation. I
think that we should participate in the effort but hold off in determining
whether to file our comments with them or separately until we have a better
feel for the focus of their argument and if we can provide a unique
perspective,

Based on the above, Steve and I have developed this prognosis:

T/D will likely fail to move in the Senate, though the RBOCs may try some
different tactics than in the House.
Failing a legislative remedy, the RBOCs full energies will then focus on the
FCC.
It is very difficult to say how the new commission will rule on the various
regulatory proceedings there. However, Congress can send strong cues to the
commission and opportunities to push back the RBOCs will be available,
especially if T/D fails in a big way.
The threat that these attempts by the RBOCs pose to EBS is paramount.
Considering that the RBOCs will likely continue to gain 271 approvals in the
states, the ability to have below special-access pricing for local
connectivity will mean the success or failure of bandwidth trading, since
there would be no way to compete with the Bells on end-to-end bandwidth
services.

I hope this is helpful as you prepare your download to Ken/Kevin/Jim. Please
let Steve or I know if you have any questions or would like additional follow
up on any of these points. Thanks