XO Communications CEO Carl J. Grivner to U.S. Congress: Bell Attempts to End Competitive Access to Copper and Last Mile Links Menace Competition and U.S. Broadband Future

CEO Urges Congress to Press for Rules That Rein in Incumbents' Anti-Consumer "Copper Cartel" and Anti-Competitive Forbearance Petitions


WASHINGTON, DC--(Marketwire - July 22, 2008) - XO Communications CEO Carl J. Grivner today warned Congressional leaders that incumbent operators' efforts to halt competitors' access to last mile connections remain the single greatest threat to telecom competition and America's broadband future, and pressed for rules that protect the public interest.

In testimony before the U.S. House Telecommunications Subcommittee on Telecommunications and the Internet, Grivner condemned the Baby Bells' continuing campaigns to restrict competitors' access to last mile legacy network facilities. The Bells' chief tactics are "copper cartel" initiatives that shut down copper lines, and regulatory forbearance petitions designed to end pro-competitive wholesale rates for local transport and facilities.

Grivner said, "The predominant issue of 21st century telecommunications is broadband choice and options for businesses and consumers which allow them to choose their broadband provider based on customer need. The competitive industry has been a major source of billions of dollars in investment for broadband deployment and innovation. But we continually face incumbents' efforts to restrict access to essential last mile links that are critical to competitive broadband offerings."

Grivner charged the incumbents with using "copper cartel" programs to limit consumers' access to new copper-based broadband services offered by competitors.

"Legacy copper networks constructed over the past century -- and funded by ratepayers -- are ubiquitous, reaching the vast majority of businesses and over 100 million U.S. households," Grivner said. "New technologies have transformed copper network capabilities from simple voice and dial-up to a major vehicle of broadband communications with speeds of 45 Mbps today and 100 Mbps in the not too distant future. When incumbents cut copper lines, they are really disconnecting businesses and consumers from an important and readily available broadband alternative."

Grivner also criticized the Baby Bells' use of the Telecom Act forbearance statute to end-run pro-competitive wholesale pricing rules for last mile connections, and praised Congressional efforts to eliminate the onerous "deemed granted" provision of the law.

"This Committee has taken an important step by introducing H.R. 3914, the 'Protecting Consumers Through Proper Procedures Act,'" said Grivner. "The bill would end an incumbents' ability to win deregulation by default, a very real threat when and if the Commission fails to decide on a petition before the legal deadline passes. But correcting merely one aspect of forbearance is not sufficient. The entire concept of forbearance as it has become unduly misused by the ILECs is deeply flawed. Congress should press for strict procedural rules and substantive requirements that bring certainty and consistency to forbearance. We need to fix forbearance once and for all."

The current lack of procedural rules governing the forbearance process means that:

--  Incumbent monopolies can file petitions to initiate regulatory
    proceedings that push their own agenda and set a fixed timetable for a
    regulatory decision without similar deadlines on data filings;
--  Petitioners can and do file late or incomplete data;
--  Regardless of the weakness of data supporting a forbearance bid,
    petitioners may file and re-file, consuming enormous resources of the FCC
    and competitors.
    

Recent petitions by Verizon and Qwest seek to eviscerate the very competitive foundations of the Telecommunications Act of 1996 and show the ability of incumbents to waste regulators' and competitors' resources, according to Grivner.

"The FCC closely studied the market evidence, found it lacking on all counts, and unanimously rejected Verizon," said Grivner. "Only weeks later, Verizon re-filed forbearance petitions in some of the same markets, and is using the same data already rejected by the Commission."

"Qwest's petitions are in many respects similar to Verizon's and should also be rejected," said Grivner. "As importantly for the long term, we need rules that list substantive requirements for forbearance petitions and end this unconscionable waste of regulators' and competitors' time."

About XO Communications

XO, a subsidiary of XO Holdings, Inc. (OTCBB: XOHO), is a leading provider of 21st century communications services for businesses and communications services providers, including Fortune 500 businesses, leading cable companies, carriers, content providers, and mobile operators. Utilizing its unique and powerful nationwide IP network and extensive local metro networks and broadband wireless facilities, XO offers customers a broad range of managed voice, data and IP services in 75 metropolitan markets across the United States. For more information, visit www.xo.com.

Contact Information: Contact: Jim Crawford Crawford Public Relations T: 703-753-4480 M: 703-498-7315