The FCC released its much anticipated UNE-P rules for ILECS. These rules basically undo requirements by incumbent carriers to have to lease their lines to competitors at cost-based rates. There are some exceptions… For example, where there is limited competition. The rationale is that LECs will be able to invest more fully in building infrastructure if they know they don’t need to share these investments with competitors.
An insightful quote from the 100 page-plus order follows:
This Order imposes unbundling obligations in a more targeted manner where requesting carriers have undertaken their own facilities-based investments and will be using UNEs in conjunction with self-provisioned facilities. By adopting this approach, we spread the benefits of facilities-based competition to all consumers, particularly small- and medium-sized enterprise customers. We believe that the impairment framework we adopt is self-effectuating, forward-looking, and consistent with technology trends that are reshaping the industry. As we recognize below, the long distance and wireless markets are sufficiently competitive for the Commission to decline to unbundle network elements to serve those markets. Our unbundling rules are designed to remove unbundling obligations over time as carriers deploy their own networks and downstream local exchange markets exhibit the same robust competition that characterizes the long distance and wireless markets.
The bold text above is quite true as VoIP has increased long-distance competition by an order of magnitude. I am not sure about the wireless market though. There are a handful of carriers in this country and the list gets smaller as time goes on. Verizon Wireless for example has terrible phones to choose from. Walking into a Verizon Wireless store is like taking a tour of the vacuum tube era of cellular technology. They don’t need to be competitive because their network is so good. I suppose you could successfully argue that there is effective wireless competition though. But I digress.
Michael Powell’s UNE-P comments are worth reading. Here is a taste:
This item decidedly does not attempt to make all sides happy. Consequently, one will undoubtedly hear the tortured hand-wringing by incumbents that they are wrongly being forced to subsidize their competitors. They have a legal duty to provide access under limited conditions and they do protest too much in arguing for the end of vast portions of their unbundling requirements. Conversely, one can expect to hear dire predictions of competition’s demise from those who wanted more from this item. Time will show this will not be so. Business models may change, but competition and choice for consumers in the information age will continue to grow and thrive.
Interesting point in bold above but ILECS have gained in this order. I can’t see how they lost at all. But yes, I am sure they want more. CLECS however are scrambling to deal with this change in government policy and our nation continues to slip in terms of broadband speed and adoption when compared with other countries. I can’t see how reducing competition is good. That is what I see in this order.
The Commission press releases are always fun to read and are refreshingly free of legalese. Commissioner Abernathy explains how these rules are designed to take the court’s recent rulings into consideration while Commissioner Copps points out that this order will negatively impact consumers. Finally, Commissioner Adelstein dissents and this is not unusual for him. Here is an excerpt:
With this Order, the Commission officially cuts the cord on the local competition provisions of the Telecommunications Act of 1996, the companies and investors which sought to deliver on the promise of the Act, and the American consumers to whom that promise was made. By fundamentally undermining Congress’s vision of competition, the Commission chooses the path of higher rates and fewer choices for both residential consumers and small businesses.
In this Order, the Commission adopts a wire center-based approach for these elements that is disconnected from the operational and economic barriers a competitor would face if it had to duplicate the incumbent’s legacy network.
The Blue text in the FCC UNE-P release below says a great deal about the future of UNE-P and explains why so many CLECS are signing up for TMC’s UNE-P to VoIP Summit to be held in conjunction with Internet Telephony Conference & Expo this month in Miami Florida. I am looking forward to holding this summit and hopefully CLECs will come away from the conference learning what they need to know in transition from UNE-P to VoIP.
FCC ADOPTS NEW RULES FOR NETWORK UNBUNDLING OBLIGATIONS OF INCUMBENT LOCAL PHONE CARRIERS
New Network Unbundling Rules Preserve Access to Incumbents’ Networks by Facilities-Based Competitors Seeking to Enter the Local Telecommunications Market
The rules directly respond to the March 2004 decision by the U.S. Court of Appeals for the D.C. Circuit which overturned portions of the Commission’s Unbundled Network Element (UNE) rules in its Triennial Review Order. We provide a brief summary of the key issues resolved in today’s decision below.
· Unbundling Framework. We clarify the impairment standard adopted in the Triennial Review Order in one respect and modify its application in three respects. First, we clarify that we evaluate impairment with regard to the capabilities of a reasonably efficient competitor. Second, we set aside the Triennial Review Order’s “qualifying service” interpretation of section 251(d)(2), but prohibit the use of UNEs for the provision of telecommunications services in the mobile wireless and long-distance markets, which we previously have found to be competitive. Third, in applying our impairment test, we draw reasonable inferences regarding the prospects for competition in one geographic market based on the state of competition in other, similar markets. Fourth, we consider the appropriate role of tariffed incumbent LEC services in our unbundling framework, and determine that in the context of the local exchange markets, a general rule prohibiting access to UNEs whenever a requesting carrier is able to compete using an incumbent LEC’s tariffed offering would be inappropriate.
· Dedicated Interoffice Transport. Competing carriers are impaired without access to DS1 transport except on routes connecting a pair of wire centers, where both wire centers contain at least four fiber-based collocators or at least 38,000 business access lines. Competing carriers are impaired without access to DS3 or dark fiber transport except on routes connecting a pair of wire centers, each of which contains at least three fiber-based collocators or at least 24,000 business lines. Finally, competing carriers are not impaired without access to entrance facilities connecting an incumbent LEC’s network with a competitive LEC’s network in any instance. We adopt a 12-month plan for competing carriers to transition away from use of DS1- and DS3-capacity dedicated transport where they are not impaired, and an 18-month plan to govern transitions away from dark fiber transport. These transition plans apply only to the embedded customer base, and do not permit competitive LECs to add new dedicated transport UNEs in the absence of impairment. During the transition periods, competitive carriers will retain access to unbundled dedicated transport at a rate equal to the higher of (1) 115% of the rate the requesting carrier paid for the transport element on June 15, 2004, or (2) 115% of the rate the state commission has established or establishes, if any, between June 16, 2004 and the effective date of this Order.
· High-Capacity Loops. Competitive LECs are impaired without access to DS3-capacity loops except in any building within the service area of a wire center containing 38,000 or more business lines and 4 or more fiber-based collocators. Competitive LECs are impaired without access to DS1-capacity loops except in any building within the service area of a wire center containing 60,000 or more business lines and 4 or more fiber-based collocators. Competitive LECs are not impaired without access to dark fiber loops in any instance. We adopt a 12-month plan for competing carriers to transition away from use of DS1- and DS3-capacity loops where they are not impaired, and an 18-month plan to govern transitions away from dark fiber loops. These transition plans apply only to the embedded customer base, and do not permit competitive LECs to add new high-capacity loop UNEs in the absence of impairment. During the transition periods, competitive carriers will retain access to unbundled facilities at a rate equal to the higher of (1) 115% of the rate the requesting carrier paid for the transport element on June 15, 2004, or (2) 115% of the rate the state commission has established or establishes, if any, between June 16, 2004 and the effective date of this Order.
· Mass Market Local Circuit Switching. Incumbent LECs have no obligation to provide competitive LECs with unbundled access to mass market local circuit switching. We adopt a 12-month plan for competing carriers to transition away from use of unbundled mass market local circuit switching. This transition plan applies only to the embedded customer base, and does not permit competitive LECs to add new switching UNEs. During the transition period, competitive carriers will retain access to the UNE platform (i.e., the combination of an unbundled loop, unbundled local circuit switching, and shared transport) at a rate equal to the higher of (1) the rate at which the requesting carrier leased that combination of elements on June 15, 2004, plus one dollar, or (2) the rate the state public utility commission establishes, if any, between June 16, 2004, and the effective date of this Order, for this combination of elements, plus one dollar.
Action by the Commission, December 15, 2004 by Order on Remand (FCC 04-290). Chairman Powell, Commissioners Abernathy and Martin, with Commissioners Copps and Adelstein dissenting. Chairman Powell, Commissioners Abernathy, Copps and Adelstein issuing separate statements.
Wireline Competition Bureau Staff Contact: Jeremy Miller, 418-1507; Email: email@example.com