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Local Broadband Providers Save $Billions

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In 2007, Wall Street bet that Verizon would win regulatory approval of wholesale rate hikes that would price competitive local broadband providers and telephone companies out of business.

$1 billion XO Communications hired Crawford to stop $100 billion Verizon win what looked like an “inevitable” Federal Communications Commission (FCC) policy decision.  What followed was an award-winning PR initiative fueling one of the more surprising and remarkable “come from behind” telecom policy victories of the decade.

The task put to us didn’t appear that promising at the outset.  The battle with Verizon would prove to be the most challenging policy fight Crawford had ever undertaken.  What we faced on Day 1:

  1. Verizon wanted the FCC to grant “regulatory forbearance” from federal rules requiring former Regional Bell Operating Companies (RBOC) to provide wholesale network services to smaller providers at competitive-based rates.  Verizon sought forbearance in six major East Coast markets, for starters.  If they won there, the deregulation of other markets in their service region would inevitably follow.
  2. Under the leadership of its Chairman, the FCC appeared predisposed to grant Verizon’s request.  Qwest, another RBOC, had already set a key precedent, winning approval for an identical petition.
  3. Even if the FCC opted not to vote on the petition, Verizon could still win. If the deadline for the FCC vote came & went, the petition would be “deemed granted” under a loophole in the law.
  4. Under the deregulation-minded Bush Administration, the RBOCs had won a string of major victories undoing the pro-competitive provisions of telecommunications law.  In the eyes of most of the world, approval of Verizon’s forbearance petition would just be one more.
  5. Most national media didn’t care.   “Regulatory forbearance” was too arcane a topic.  Because competitors were small, reporters assumed that a Verizon win would affect few customers.
  6. Media on the comms beat were focused on what they considered to be bigger news: The FCC chairman’s stated interest in re-regulating the cable industry, a far larger business.
  7. Some press seemed predisposed toward Verizon.  When the competitive telecom industry imploded with the dot.coms in 2001, it lost credibility in many journalists’ eyes.  Some saw the demise of competition as inevitable, others as a just comeuppance.
  8. XO and other competitive providers had run through several PR agencies, without much success.  Results: 6 media hits in the first 9 months of 2007.
  9. Time was short.  The FCC would vote on Verizon’s petition — or allow it to be “deemed granted” — on Dec. 6, just 75 days away.
  10. If competitors lost this fight, many would have to shut their doors — The wholesale rate hike would price them out of the market.

The one glimmer of hope: The competitive industry had friends on “the Hill.”  But for Congressional leaders to help us, we had to do a better job of stirring up support for our cause.

Crawford went on the attack.

In a letter to the editor in The Washington Post, we likened the FCC Chairman to a Roman emperor fiddling with cable TV while ignoring consumers’ and businesses’ more critical need for competitive choice in local broadband and telecommunications services.  We didn’t mince words: “An FCC misstep will mean higher charges.”

We reinforced this point by promoting a third party study showing the downstream impact of Verizon’s plans: $2.4 billion in higher consumer phone bills across the six major cities where the RBOC sought forbearance. 

The Wall Street Journal broke the story in New York City and nationwide, “Verizon Rate Ruling May Hit Small Businesses.”  Similar coverage followed in The Newport News Daily Press, The Philadelphia Inquirer, The Providence Business News and the Boston Business Journal .  All six markets targeted by Verizon.

We wrote and placed op eds appearing in many of the same papers and more. The score: 50 key media hits.  Editors added their own opposition to Verizon.  Consumer groups piled on.  As media coverage appeared, representatives of the competitive industry quickly circulated copies on the Hill.  Then Congress applied heat.

In early December the FCC delivered a shocker to the industry and to Wall Street pundits who’d predicted yet another RBOC policy win: a unanimous vote against Verizon, defeating this regulatory forbearance bid and preserving competition.

For its work, Crawford won the 2008 PR News Legal PR Award for “Best Media Relations During Litigation or Crisis.”

We weren’t done.  In 2008, When Qwest tried to expand its first forbearance win to other markets in the West, Crawford stepped in and helped defeat that, too.