*Pages 1--2 from  Microsoft Word - 8792.doc*
 May  4,  2001 
 The  following  is  the  text  of  the  letter  sent  by  Chairman  Michael  Powell  to  the  leaders  of  the  Senate  and  House  Commerce  and  Appropriations  Committees  on  Friday,  May  4,  2001 
 In  the  wake  of  the  difficulties  that  have  confronted  many  of  the  nation's  competitive  local 
 exchange  carriers  ("  CLECs")  during  the  past  several  months,  I  would  like  to  raise  with  you 
 several  issues  that  I  believe  are  critical  to  the  Commission's  effective  enforcement  of  the 
 provisions  of  the  1996  Telecommunications  Act.  First,  let  me  emphasize  the  seriousness  with 
 which  I  take  the  Commission's  responsibility  to  implement  and  enforce  the  provisions  of  the  Act. 
 A  vibrant  competitive  local  exchange  carrier  industry  is  central  to  Congress's  vision  for  opening 
 local  markets  to  competition.  To  this  end,  it  is  imperative  that  the  Commission  and  State 
 commissions,  as  partners  in  the  enforcement  scheme  of  the  1996  Act,  be  vigilant  in  ensuring  that 
 incumbent  local  exchange  carriers  ("  ILECs")  meet  their  obligations  under  the  statute. 


 In  my  view,  the  difficulties  currently  facing  the  CLEC  industry  stem  from  a  variety  of 
 conditions.  Investors  who  were  previously  optimistic  about  the  business  plans  of  certain  CLECs 
 have  (and  sometimes  inexplicably)  turned  cold  on  those  plans  at  the  very  time  that  they  have 
 begun  to  bear  fruit.  Although  there  are  examples  of  CLECs  with  workable  plans,  other  CLECs 
 appear  to  have  steadfastly  adhered  to  business  plans  that  show  little  or  no  promise  of 
 profitability.  And  in  some  cases,  CLECs  may  have  been  stymied  by  practices  of  incumbent  local 
 exchange  carriers  that  appear  designed  to  slow  the  development  of  local  competition. 


 Although  the  Commission  is  working  hard  with  our  existing  resources  to  enforce  the 
 local  competition  provisions  of  the  1996  Act,  I  believe  there  is  more  that  we  can  do  with  the  help 
 of  Congress.  Currently,  under  47  U.  S.  C.  §  503(  b)(  2)(  B),  the  Commission's  forfeiture  authority 
 against  common  carriers  for  any  single  continuing  violation  of  the  Act  or  the  Commission's  rules 
 is  limited  $1.2  million,  including  inflationary  adjustments.  Given  the  vast  resources  of  many  of 
 the  nation's  ILECs,  this  amount  is  insufficient  to  punish  and  to  deter  violations  in  many 
 instances.  Congress  should  consider  increasing  the  forfeiture  amount  to  at  least  $10  million  in 
 order  to  enhance  the  deterrent  effect  of  Commission  fines. 
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 In  addition,  Congress  should  consider  other  mechanisms  to  compensate  harmed  CLECs 
 and  to  enhance  deterrence  in  this  area.  For  example,  Congress  could  give  the  Commission  the 
 authority  to  award  punitive  damages,  attorneys  fees  and  costs  in  formal  complaint  cases  filed 
 under  Section  208  of  the  Communications  Act,  or  require  that  interconnection  agreements 
 include  liquidated  damages  provisions. 


 Moreover,  under  47  U.  S.  C.  §  503(  b)(  6)(  B),  the  statute  of  limitations  for  forfeiture  actions 
 against  common  carriers  is  one  year  from  the  date  of  the  alleged  violation.  This  time  period  has 
 often  proven  insufficient,  especially  given  that  the  carriers  whose  actions  are  being  investigated 
 usually  possess  much  of  the  information  needed  to  determine  whether  a  violation  has  occurred. 
 A  longer  statute  of  limitations  period  would  afford  the  Commission  a  better  opportunity  to 
 thoroughly  investigate  an  alleged  violation.  I  would  also  like  to  work  with  Congress  to  help 
 identify  those  areas  in  which  clarification  of  the  Commission's  jurisdictional  and  enforcement 
 authority  would  better  equip  the  Commission  to  fulfill  its  enforcement  mission.  Finally,  I  look 
 forward  to  working  with  Congress  to  ensure  that  the  Commission  has  the  investigative  resources 
 necessary  to  accomplish  this  mission. 


 I  am  committed  to  achieving  Congress's  goal  of  opening  local  markets  to  competition, 
 with  the  attendant  benefits  to  consumers.  Toward  that  end,  the  Commission  must  vigorously 
 enforce  the  local  competition  provisions  of  the  1996  Act.  I  look  forward  to  the  assistance  of  the 
 Congress  in  this  endeavor,  and  to  continuing  our  dialogue  over  these  very  important  issues. 


 Sincerely, 


 Michael  K.  Powell 
 Chairman 
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