TRIENNIAL REVIEW: EELS SLITHER ONTO REGULATORY BATTLEFIELD

Since the Federal Communications Commission issued its Triennial Review order Aug. 21, most of the attention on the unbundled network element portion has been focused on switching. But another issue that has gone relatively unnoticed to this point—enhanced extended links, or EELs—is promising to become equally contentious.

Last week the U.S. Telecom Association and the Bell companies filed a reply brief with the U.S. Court of Appeals for the District of Columbia Circuit supporting their request for a stay of the order. In it they argued that the FCC's new rules governing EELs, which are loop-transport combinations that connect customer premises to a competitive carrier's point of presence, would allow CLECs to unlawfully convert wholesale-priced special access facilities currently used for long-distance service to the more attractive TELRIC-priced alternative.

The FCC believes EELs stimulate the growth of facilities-based competition in the local market because they extend the geographic reach of a competitive carrier by allowing it to lengthen a loop from the end office serving a customer to a different end office in which the CLEC already is located.

EELs are supposed to be used only by CLECs that provide a “significant amount” of local service, something the commission affirmed in its order by identifying stringent qualifying criteria (see figure). The end result, at least in theory, is that smaller integrated communications providers offering local and long-distance bundles are eligible, while interexchange carriers such as AT&T and MCI are not.

But the FCC reversed itself on one aspect, which incumbents believe opened a loophole for IXCs: Previously, the commission had prohibited commingling or cross-connecting unbundled network elements with special access facilities. More recently, the commission decided to allow commingling, believing the restriction would put CLECs at a competitive disadvantage by forcing them to operate two functionally equivalent networks, one for local service and the other for long-distance.

“We now have some additional opportunities to explore the use of EELs,” said Wanda Montano, vice president of regulatory affairs for US LEC, which has a network consisting primarily of an OC-48 ring purchased under a special access tariff.

RULES OF THE ROAD To order high-capacity EELs, competitive carriers must certify that: They have state authorization to provide local service They are providing local voice service over every DS-1 circuit They are serving each circuit via a Class 5 switch or other local switch They are terminating each circuit in a co-lo facility located in the same LATA as the customer premises They are serving each circuit via an interconnection trunk in the same LATA as the customer premises They are providing at least one active DS-1 switch capable of providing local voice traffic for every 24 EELs Source: FCC Triennial Review Order

The decision allowing commingling disturbs USTA and the Bells because they believe it opens the door for the IXCs to game the system. “We're becoming increasingly concerned about this because it would allow toll and local traffic to travel over the same facilities,” said Bob Blau, vice president of federal regulatory affairs for BellSouth. “It's set up in such a way that it would be extremely difficult for us to police it. This is a serious problem.”

There's also serious money at stake. According to Blau, EELs typically are priced 40% below special access facilities. Verizon Communications, for instance, estimates that it will generate special access revenues in the range of $168 million to $252 million next year.

In its rush to finish an order that originally was expected in January, the FCC was forced to rely on “educated guesses” concerning the effectiveness of the aforementioned safeguards, according to Blau. “They're not as tight as they need to be.”

However, not all of the rules governing EELs are meeting with such resistance. As state utility commissions conduct their impairment analyses over the next nine months, they almost certainly will remove transport from the UNE list in many markets. Because EELs are a combination of loop and transport, such an event would undermine a CLEC's ability to obtain that facility.

“If transport comes off the list, the EEL on that route goes away,” Blau said.

That would be a troubling development for competitive carriers, which consider EELs the DS-1 equivalent of the UNE platform. “It would be horrible,” said John Ivanuska, vice president of carrier relations for Birch Telecom.

At that point, a CLEC would have two options: buy both facilities at special access prices, or purchase transport from a third party.

But Ivanuska isn't overly concerned. “It's going to be pretty clear that the RBOCs still have to provide transport based on their obligations under Section 271,” he said.