FCC’s Adelstein Says No Surprises So Far

Jonathan Adelstein says the controversial and emotionally charged Triennial Review is a “huge challenge” but no activity on the eighth floor so far has startled the new FCC commissioner.

Adelstein, a former legislative aide to U.S. Sen. Tom Daschle (D-S.D.), was sworn in as the fifth commissioner Dec. 3, leaving the self-described champion of rural America three months to weigh in on a federal proceeding that many experts say will shape the future of local telephone competition, and possibly, the health of the broader industry.

“It’s one of the biggest challenges I’ve ever faced in my life,” Adelstein said in an interview Monday, referring to the Triennial Review and upcoming broadband proceedings that collectively will represent some of the most important telecom regulatory action in years.

But Adelstein says nothing about his new job so far has surprised him nor does he believe his recent arrival to the commission has delayed the Triennial Review – a proceeding seemingly packed with more questions than answers about what Congress intended when it opened the local phone networks to nascent rivals.

“So far I don’t think it’s delayed anything,” says Adelstein, who spoke Monday before rural telephone companies during the National Telecommunications Cooperative Association 49th annual meeting in Phoenix.

Under a court order, the FCC must issue a ruling by Feb. 20 regarding which unbundled network elements incumbent phone companies must lease to competitors at heavily discounted rates.

The so-called UNE-P has encouraged long-distance phone giants AT&T Corp. and MCI as well as smaller companies to compete with the Bell operating companies for local phone customers in the residential market. Under the UNE-P, the Bells are required to lease their networks to rivals at rates state regulators set based on a forward-looking cost model.

What federal and or state regulators ultimately will determine is whether and where there is sufficient competition in an area to scrap the incumbents’ resale obligations, including the leasing of switches.

In Section 251 of the Telecommunications Act of 1996, Congress established unbundling and resale obligations requiring incumbent phone providers to lease pieces of their network to rivals. The law includes vague language that grants competitive phone providers access to the incumbent’s network elements if the competitors are otherwise impaired from being able to provide the service without those elements.

The law states: “In determining what network elements should be made available for purposes of subsection (c)(3), the Commission shall consider, at a minimum, whether access to such network elements as are proprietary in nature is necessary; and the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer.”

What Congress meant by those statements long has been the subject of debate. Two courts have reviewed the matter in proceedings on the FCC’s UNE regulations, say observers.

Randolph May, senior fellow and director of communications policy studies at the Progress & Freedom Foundation, says the U.S. Supreme Court and D.C. Circuit Court of Appeals found that the FCC’s UNE rules were “too expansive” and “not consistent with the Congressional intent.”

In the May 2002 FCC vs. USTA ruling, the Court of Appeals found “the FCC’s rules were unlawful because they were essentially still unlimited in the amount of sharing that was required,” May says. The high court also directed the FCC to consider specific geographic areas competition might prevail, he says.

The FCC could issue a ruling as early as a week from today. Adelstein says his background on Capital Hill taught him the craft of building a consensus among people even when there is disagreement.

That may help the FCC meet its deadline, but it remains to be seen whether the Bells and their rivals will view the ruling as a compromise they can live with.