Sbc Gets More Serious On Regulatory Compliance

Sbc Gets More Serious On Regulatory Compliance – SBC Communications

Byline: Glenn Bischoff

With one eye on the past and the other on its future, SBC Communications last week created a unit it hopes will bring a cohesiveness and efficiency to its regulatory compliance efforts that previously had been lacking.

The carrier also hopes the new regulatory compliance unit will help it accomplish its short-term goal of landing FCC approval to provide long-distance service throughout its region, and its longer-term goal of reducing the regulatory burdens under which it and other incumbents currently operate.

Priscilla Hill-Ardoin was named to head up the unit. She is a 27-year SBC veteran who most recently served as the carrier’s senior vice president of the FCC. James C. Smith, formerly the president and CEO of SBC Ameritech Ohio, will succeed Hill-Ardoin in that post.

Hill-Ardoin said the unit’s goal is to centralize and institutionalize SBC’s compliance activities in order to ensure that each line of business, operating entity and affiliate is in sync with federal and state requirements. She said a centralized approach would make it easier to establish, communicate and review company policies – and figure out who to hold accountable should the execution prove faulty.

“We want to create a culture where everyone in the company understands the impact that regulatory compliance has on our financial health and reputation,” Hill-Ardoin said.

The move to install a regulatory compliance chief isn’t new, particularly for the largest telcos. Verizon embarked on a similar path about two years ago. “It’s really worked for us,” said Don Evans, vice president of federal regulatory advocacy for Verizon Communications. “Internally, it’s sharpened our focus and created a point to go to for any compliance question or issue.”

The unit, which is headed by Senior Vice President Jeff Ward, has also helped to improve Verizon’s dealings with the FCC. “The FCC knows where the buck stops,” Evans said. “When there’s an issue or problem, they know who to call.”

Since the Telecom Act of 1996, most RBOCs have had plenty of problems with the FCC and state commissions for merger- or competition-related violations. According to Hill-Ardoin, the fines incurred by SBC are a source of personal irritation to SBC Chairman Ed Whitacre, who, along with recently appointed SBC President Bill Daley, made the decision to create the regulatory compliance unit.

Hill-Ardoin added that anyone who believes that million-dollar fines are simply a “cost of doing business” for a company like SBC should spend some time with Whitacre.

“I wish that anyone who has the audacity to say SBC doesn’t care about fines could walk in my shoes for just one day,” she said. “It doesn’t matter whether it’s 50[cent], $3 million or $60 million. Somebody has to make that money back, and we do it by selling DSL for $50 a month. You put the arithmetic to that.”

While reducing the number of violations is an important goal for incumbents, the real motivation behind SBC’s creation of a dedicated compliance wing may be more short term.

Hill-Ardoin, in fact, conceded the point. “We want to encourage regulators to move from more regulation to less regulation, and in order to do that, we need to show that we can effectively regulate ourselves,” she said. “[FCC Chairman] Michael Powell has indicated that the counterbalance to less regulation is strict enforcement.”

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