XO Communications: The Comeback Trail for Competition

XO Communications and other competitive telecom and broadband companies faced the biggest crisis in their history: a bid by Verizon to jack up wholesale rates for local services that were essential to alternative providers.

The situation looked grim. The Federal Communications Commission (FCC) had already vetted one pilot market wholesale rate increase for Qwest, and seemed likely to endorse Verizon’s much broader petition. If approved, Verizon’s scheme would end competitive telecom and broadband services in their region, and set the stage for all-out wholesale rate increases by Baby Bells across the nation.

The challenge was equally daunting on the PR front. Press and analysts were apathetic and unwilling to cover competitors’ side of the story. Convinced that competitive providers lacked the firepower to stop Verizon, most media considered the Bell’s rate rise inevitable. As a result, in the nine months after Verizon filed its petition at the FCC, PR agencies hired by opponents generated a mere six articles. Nobody would listen.

With the FCC vote only 75 days away, XO asked Crawford to take on what many saw as PR’s version of Mission Impossible.

Crawford went on the attack. In a letter to the editor placed in The Washington Post, we had XO’s CEO liken the FCC Chairman to a Roman emperor fiddling while ignoring consumers’ critical need for competitive choice in broadband. “An FCC misstep,” XO’s leader warned, “will mean higher charges for customers.”

We reinforced this point by promoting a third party study showing the downstream impact of Verizon’s plans: $billions in rate increases to consumers. The Wall Street Journal  broke the story nationwide, triggering 50+ anti-Verizon news stories throughout their region.

Crawford leveraged every opening. We wrote and placed byline articles exposing the dangers of Verizon’s rate hike to America’s pro-competitive communications policy. We networked with national consumer groups to generate joint PR, then created and placed anti-Verizon advertisements in national and trade press. As the ads appeared and media coverage swelled, representatives of the competitive industry circulated copies on Capitol Hill. Incensed at Verizon’s plans, Congressional leaders applied heat to the FCC.

Then came the day that stunned the telecom establishment and Wall Street pundits who had written off XO and its peers. The FCC delivered a shocker: a unanimous 5-0 vote against Verizon. For its role in securing this unexpected coup, Crawford won the PR News award for “Best Media Relations During Litigation or Crisis.” We weren’t done yet. Crawford went on to help XO and fellow competitors defeat me-too rake hike bids by Qwest.

In retrospect, it is clear that XO’s successful campaign marked a major shift in telecom policy. Over the previous decade, many FCC decisions had tilted toward positions favoring the incumbent telecom monopolies. Once invincible, the Bells were stopped cold the day XO routed Verizon. Today when the FCC rejects anti-competitive mergers or takes action to ensure a free and open Internet, they are building on the precedent set by XO — and PR’s Mission Impossible team.