Cavalier Chairman Brad Evans to Congress: "Fix the Broken Forbearance Process".

Innovative Leader in Competitive Residential and Business Telephone and Broadband Service Accuses Verizon of Ignoring Market Share Proof and Using Erroneous Data to Support Premature Deregulation Bids

RICHMOND, Va. -- Cavalier Telephone & TV Chairman Brad Evans explained to a Congressional Committee today that incumbent phone companies are deliberately using erroneous data to justify "regulatory forbearance" petitions. He urged federal lawmakers to fix a broken forbearance process that is returning the telecommunications industry to a monopoly and undercutting the competitive goals enacted by Congress in the Telecommunications Act of 1996.

In testimony before the House Committee on Energy and Commerce, Mr. Evans cited Verizon for basing its forbearance petitions on E911 database information that was not intended to measure competition. Verizon itself has acknowledged in other proceedings that this data grossly overstates the extent of competition.

Evans also charged Verizon with ignoring readily available data that shows the true state of competition in areas where the Bell aims to roll back pro-competitive requirements imposed by the Telecommunications Act. Specifically, Verizon seeks exemption from federal requirements to provide unbundled local loops - a critical component of service offerings by Cavalier and other competitors.

"The last mile of copper wires is essential to Cavalier's ability to compete, and has allowed us to provide new innovations by inventing startling new uses for copper facilities," Evans said. "Using copper, Cavalier provides voice, high-speed Internet and 150 channels of television to thousands of customers in both the inner city and the suburbs, all at a significant discount compared to Verizon's FiOS."

Verizon is attempting to use a "loophole" (forbearance) in the 1996 Telecom Act to eliminate competition and return to the monopoly status. The 1996 Telecom Act enabled last mile innovation and reduced telecom prices by mandating that competitors could rent the copper telephone wires which were paid for by the monopoly rate payer. Evans added, "Verizon's market share is not where it was a decade ago, but Verizon seems determined to eliminate all competition by any means possible. Here, that means using data that Verizon knows is flawed, and overlooking other data on market share." Evans also pointed out that the FCC only requires Verizon to share older copper facilities, not the new fiber facilities that Verizon uses to provide its FiOS services. He added that Verizon wants to limit competition by tearing out old copper facilities, calling them outmoded. However, "Verizon sings a different tune when it comes to setting a price for competitors to use of those 'old' copper facilities," he said.

Cavalier currently serves residential and business customers in the Philadelphia and Virginia Beach MSAs, two of the markets targeted by Verizon for "forbearance" from the facilities-sharing rules of the Telecommunications Act. If Verizon's petition is approved by the Federal Communications Commission, Cavalier's competitive viability faces a significant threat.

Under the requirements of the forbearance statute, incumbent monopolies petitioning for relief from regulatory requirements first must meet strict competitive requirements, proving that a market is fully competitive, and that the repeal of a regulation will not harm consumers or the public interest. The law is clear that the burden of proof that a market is competitive rests with the petitioning incumbent telephone company.

"Because Verizon can't or won't lay out the facts about market share, competitors must do what they can to point out the glaring problems with Verizon's petitions," said Evans. "Reliable data show that incumbents still thoroughly dominate the scene."

Illustrating the current status of competitive versus incumbent facilities in the six Verizon forbearance markets, Evans cited statistics from a GeoResults study, included in an ex parte letter filed with the Federal Communications Commission on October 1, 2007.

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"Months ago, in the Verizon forbearance proceeding, competitive providers purchased and filed commercially available data from GeoResults that show the amount of competitors' 'last mile' facilities," said Evans. "This information is readily available to anyone, and thus it is untrue that the Bells do not have that data. We can only surmise that Verizon has carefully avoided this information and sought to distract the FCC with other issues."

Founded in 1998, Cavalier Telephone and TV is a full-service, rapidly growing Competitive Local Exchange Carrier (CLEC) operating in 16 states including the District of Columbia. Cavalier has over $1 billion in fiber optic networking assets using state-of-the-art technology to offer high-quality phone, hi-speed Internet and digital television to more than 650,000 business and residential customers. Cavalier also provides services to government and wholesale customers. Visit cavtel.com for more information.