FCC Preserves UNE-P, Gives Bell Relief on Broadband
In a triumph for the competitive telecommunications industry, the FCC upheld local telephone regulations today that have emboldened companies to invade the once-indomitable turf of the four Bells. But the FCC also granted the ILECs regulatory relief in the broadband market, absolving them from requirements to make available to competitors fiber loops to the home and hybrid loops for packet-based switching.
“There was a good deal of horse trading,” said Russell Frisby, president of the Competitive Telecommunications Association. “Some of it benefited competitors; some of it benefited the RBOCs.”
The FCC voted to preserve the unbundled network element platform (UNE-P), which allows competitors to lease the Bell networks at heavily discounted rates for the small business and residential markets. This is not the final word, however: The commission also granted state regulators the authority to determine whether CLECs are impaired in competition without access to the incumbent networks, based on economic and operational criteria.
State regulators have nine months to analyze whether impairment exists or not in a particular market. If not, the commission must establish a three-year period for competitors to migrate off the local resale platform that has been the center of so much controversy and rhetoric over the last several months.
The Bells received some good news in the broadband area. The top communications regulator removed line-sharing requirements that allow broadband service providers to lease the incumbent’s high-speed portion of the loop. Broadband providers have three years to migrate customers to new arrangements, and the price for the high-frequency portion of the loop will increase incrementally each year of the transition.
The FCC has not yet issued the final order — a voluminous document that the entire industry is anxiously awaiting.
The highly anticipated ruling was met with criticism on both sides: The Bells and their rivals lambasted the agency over various components of the ruling, signaling their intent to appeal the decision.
“Another round of litigation is in no one’s interest, but if we cannot get the FCC to follow the dictates of the statute then we will have to turn to the courts to overturn the FCC rules,” Tom Tauke, senior vice president for public policy and external affairs at Verizon Communications Inc., told reporters today. “I expect we will challenge this in court.”
Sarah Bialk, a spokeswoman for UNE-P provider Z-Tel Technologies Inc., said today’s ruling partially “lifts the dark cloud that has been hanging over the competitive industry for months now.”
But Bill Blau, vice president of federal regulatory affairs for BellSouth Corp., said the ruling produced the opposite of what investors wanted and the FCC intended: More uncertainty.
“This ruling has added a lot of uncertainty to the industry, and investors can’t quantify or manage the risks associated with it,” he said. “So rather than take it they will take their money and walk. This is not a healthy investment environment.”
Those competitors who opposed the broadband rules said the FCC commissioners made hasty decisions last night that might not hold up in court. By some reports, the commissioners were up until midnight or later last night haggling over the broadband issues.
“This was an 11th hour backroom deal that was struck last night,” said Jason Oxman, assistant general counsel with Covad Communications Co. “We don’t know if the three commissioners [Kevin J. Martin, Michael J. Copps and Jonathan S. Adelstein] . will be able to come up with a sustainable cogent legal theory to support this irrational decision they have reached on broadband competition.”
Jonathan Askin, general counsel with the Association for Local Telecommunications Services (ALTS), concurred. “For the past five years the FCC has been diligently trying to balance competing interests and resolve the broadband question and the new network investment question,” he said. “It seems to have been resolved in five minutes” at the midnight hour.
