CLECs: Section 271 A Necessary Response to Forbearance

Written by Kelly
November 17, 2009

Forbearance relief for the Bells under Section 251 has caused CLECs nothing but grief. Now the Section 271 Coalition hopes to help reverse competitors fortunes by pressing the FCC to enforce an oft-overlooked part of the 1996 Telecom Act.

Eight CLECs, fed up with getting the short end of the competitive stick, are asking the FCC to force the Bells to open their networks as dictated by Section 271 of the 1996 Telecom Act. They’re tired of paying high network-access prices to the Bells, and forfeiting market share to those rivals, which have steadily gained operating advantages due in large part to approved forbearance requests.

If successful in the petition, CLECs will have another avenue toward regaining some competitive ground in the wake of those approved requests. Forbearance is a loophole in the ’96 Act that gives the FCC authority to grant local loop providers regulatory relief from the Section 251 requirement to provide access to their networks at government-mandated wholesale prices. Several RBOCs have won such grants, meaning competitors have been forced to pay skyrocketing rates for basic network access.

Now, the Section 271 Coalition has petitioned the Julius Genachowski-led FCC to help reassemble a competitive landscape by doing what federal courts have barred the states from doing and make the Bells adhere to Section 271. The pricing under 271 wouldn’t equal the wholesale pricing that competitors had under Section 251, but it would be a big improvement. The Coalition is asking the FCC to limit pricing to cost, plus a reasonable contribution rate. The group proposes the contribution rate total 22 percent.

“This is a necessary response to forbearance,” said telecom economist Joe Gillan in the coalition’s Nov. 9 conference call.

The enforcement of Section 271 would also open up opportunities for new types of competitors, because, unlike Section 251, it instructs the Bells to provision unbundled elements to wireless and long-distance companies as well as CLECs.

“We’re hopeful the FCC will take a fresh look at what’s happened in the past and what’s necessary for the future,” said Genny Morelli, a partner at law firm Kelley Drye.

The group consists of 360networks, Broadview Networks, Cbeyond (CBEY), Covad Communications, NuVox, PAETEC (PAET), Sprint Nextel Corp. (S), tw telecom inc. (TWTC) and their industry association, COMPTEL.

The entities crafted their plea in hopes of starting a negotiation and arbitration process that will pave the way to FCC enforcement of Section 271. To that end, they proposed rules that create the least amount of administrative burden possible, Gillan said.

It’s time for the FCC to turn “obligations into real offerings,” Gillan added. The trick there, he said, is to make certain pricing and terms are just, reasonable and non-discriminatory.

Competitive carriers first started losing ground almost five years ago with the FCC phase-out of unbundled network element-platform (UNE-P) rules; those mandates guaranteed competitor access to Bell networks at wholesale cost. Once those protections were gone, though, CLECs fell victim to unregulated lease rates, some that ran as much as 30 percent higher than UNE-P. CLECs either had to pay the new charges, build their own networks, find transport alternatives or go out of business.

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