Martin: TELRIC must be adjusted, new infrastructure deregulated

In a sharply worded speech delivered this afternoon at a telecom conference sponsored by the Practicing Law Institute, FCC Commissioner Kevin Martin called for an adjustment of the TELRIC pricing formula and deregulation of new fiber built to a customer’s premises.

Martin also called for service capacity caps for new or upgraded facilities at levels that existed prior to the upgrade. However, incumbents would not be released from their obligations to unbundle those facilities. For example, competitors that had received 1.54 MB/s using pre-existing incumbent facilities would be entitled to access at the same bit rate using the newly deployed hybrid facilities.

Referencing the commission’s open wireline broadband proceeding, Martin said DSL services should be treated as cable modem services, which would result in incumbents being released from their obligations to unbundled such facilities.

Martin said the industry was at crossroads, and that the commission’s first priority as it considers its various open proceedings was creating an environment for new investment and deployment of advanced network infrastructures. To that point, he said the current TELRIC formula offers incumbents “insufficient return” on investment capital.

“In a nutshell, the existing TELRIC formula fails to accurately measure the true risk of capital investment under current economic conditions, and creates an unnecessary barrier for the deployment of broadband facilities,” he said.

Regarding fiber-to-the-home, Martin said current rules written for the legacy infrastructure were ill-suited for new facilities, an argument he also applied to hybrid facilities. But he added that incumbents should not be relieved of their unbundling obligations for such facilities “overnight.”

“At the end of the day, ILECs should receive the benefits of making investments in new infrastructure deployment,” he said. “But competitors should maintain the ability to receive access to end user customers at the service capacity levels they currently receive.”

Telecommunications Industry Association Matthew Flanigan praised Martin for his aggressive stance.

“Commissioner Martin today took it upon himself to move the ball forward with specific, detailed proposals for resolving the host of complicated issues the FCC faces in these proceedings,” Flanigan said.

Lately Martin has been critical of the FCC’s slow movement on the various open proceedings. He noted that the commission recently sought an extension from the January 3, 2003 deadline set by the D.C. Circuit for concluding the triennial review to February 20,2003, and hinted that the FCC might not be able to meet the extended deadline.