FCC DELIVERS MIXED UNE BUNDLE: CLECs win access to dark fiber; ILECs keep data

Access to two new unbundled network elements may give some competitive local exchange carriers a boost, but many analysts doubt that the FCC order on UNEs will alter the competitive landscape much.

The FCC last week issued a long-awaited order that revised the list of UNEs that incumbent LECs must lease to rivals at discount prices. The list remained largely intact - it contained six of the seven original items - but the FCC's few additions and deletions affected everyone.

"There weren't any major shifts in the balance of power," said Scott Cleland, an analyst with Legg Mason Precursor Group.

However, the order seemed to please CLECs more than incumbents.

"There's no doubt this order is wonderful for competition. This is the one document that helps CLECs enter the market," said Jonathan Askin, vice president of law with the Association for Local Telecommunications Services.

ILECs disagreed or said that it's too hard to gauge the order's effect yet. "I don't think it'll have a lot of impact one way or another," said Alan Ciamporcero, vice president of federal regulatory affairs for GTE.

CLECs declared victory in gaining access to subloops and dark fiber, which they say will allow more flexible network deployment and the potential for more customers. "This is much more than we had before," said Carol Ann Bischoff, executive vice president and general counsel at CompTel.

Specifically, the FCC ordered ILECs to unbundle access to loops, including high-capacity lines, DSL-capable loops, dark fiber and inside wire. ILECs also must unbundle subloops "at any accessible point," such as a pole or network interface device.

ILECs were predictably less happy with the addition of two UNEs. "I'm at a loss to explain how it would impair someone's ability to enter the market if an ILEC doesn't provide dark fiber," said Lawrence E. Sarjeant, vice president of legal and regulatory affairs for the U.S. Telephone Association. "It's one of the elements of this decision that screams for appeal."

Incumbents made some gains when the FCC dropped directory assistance and operator services from the UNE list. More notably, the FCC granted ILECs a long-sought prize by exempting from the list all facilities used to provide data services, including packet switches and DSL access multiplexers (DSLAMs). But ILECs must lease DSLAMs when competitors can't install their own at the incumbent's remote terminal.

The FCC agreed with the ILECs' argument that having to lease data network elements to rivals would discourage their investment in new technology.

"We believe there is sufficient competition out there in most areas of the country," though rural areas lag, said Commissioner Susan Ness before the 5-0 vote.

The lack of access to data elements won't hurt facilities-based CLECs that buy their own DSLAMs, it will be resellers who depend on access to the entire UNE platform, said Terry Barnich, president of New Paradigm Research Associates.

The status of another data-services regulation, whether or not the RBOCs must provide data services through separate subsidiaries, may no longer be relevant. The FCC floated the idea last year but backed down because of pressure from Capitol Hill, Askin said. The agency now seems more inclined to make separate affiliates a condition of some telecom mergers. SBC Communications and Ameritech, whose merger is pending before the FCC, already agreed to a separate division for data services.