CAP standardization for ADSL ignites passionate debate >TX Summer got a little hotter last week in Nashua, N.H., where the American National Standards Institute heard arguments from asymmetrical digital subscriber line vendors and service providers about

Special to Telephony Regardless of where they stand on the issues, proponents and detractors of the Telecommunications Reform Act of 1996 agree that the Federal Communications Commission's long-awaited Aug. 1 interconnection ruling could be the most important telecom legislation in agency history.

Yet very few people outside the FCC know what the document, which runs 544 pages, says about local exchange carriers' obligations to let new rivals into the $100 billion-a-year local phone market.

"They're being very tight-lipped on the draft that's been circulated to the commissioners," said a spokeswoman for the U.S. Telephone Association.

"We think this is the single most important provision of the statute, and the one that has the biggest economic consequences," said Jim Casserly, an aide to FCC Commissioner Susan Ness and one of about 100 FCC employees involved in the ruling.

"The world isn't going to change on Aug. 1, but it is going to be a second major step forward in the implementation of the telecom act," he said. "What we know from long-distance is that it took a long time. AT&T's monopoly was broken, and 20 years later, AT&T's market share is still 55%."

Section 251 requires incumbent LECs to offer interconnection, unbundled network elements, transport and termination, and wholesale rates for retail services to new entrants. It stipulates that LECs' pricing of these services "be cost-based, just and reasonable" and imposes on LECs a duty to provide number portability, dialing parity and access to rights of way.

The USTA spokeswoman agreed that the FCC proceeding is one of the most crucial decisions to be made to implement the act. But that doesn't mean she's happy about where it's headed.

"We've gotten the feeling that the commission may allow long-distance companies to avoid access charges," she said. "There will be nothing to supplant money that subsidized universal services, and billions of dollars in revenue will be lost. Our companies will have a difficult time. The long-distance companies have shown no desire for building out the networks in the local market; they just want to be resellers."

USTA officials believe Congress had no intention of letting interexchange carriers take advantage of the access charge loophole. The IXCs disagree.

"These dire predictions are totally false," said AT&T Vice President Gerry Salemme at a July 17 news briefing in Washington, D.C. "The Bell companies have gone to the FCC and to Capitol Hill to cry wolf and use the ratepayer as a hostage."

"Resale of the incumbent LECs' services is a key mechanism for opening local markets to competition," said Donald F. Evans, MCI's vice president for federal regulatory affairs. "But if the wholesale price is set so high that it would not allow new competitors to recover their marketing, billing and customer-service expenses and still compete with the LECs' retail price, they will be caught in a price squeeze that will discourage them from entering the market."

Yet Colleen Boothby, a Washington, D.C., attorney who represents large corporate end users, said section 251 is the "key to rational pricing of local services.

"The Bell operating companies' objective is to preserve their cash cows," she said. "They want to claim the ground is fertile for competition but preserve all the revenue streams they've had in a monopoly environment."

"The RHCs lobbied hard to have the scope of the proceeding be extremely limited," said Boothby, who worked for the FCC for 10 years. "They wanted the rate structure and prices adopted in this proceeding to apply only to competing local exchange carriers who interconnect to the incumbent networks. That means long-distance companies will still interconnect to local networks using the commission's Part 69 access rules, which is the way it's always been. This legislation presented some opportunities for fixing a lot of problems, and those will now have to wait for an access reform proceeding."