Language barrier

CLECs, ILECs continue tussle over co-location Sometime in the next seven or eight months, after much comment and reply and litigation, after the election, and possibly after the naming of a new FCC chairman, the FCC will tell us what it thinks Congress really meant when it used the word "necessary" in the Telecommunications Act of 1996.

Specifically, Section 251of the act says incumbent local exchange carriers (ILECs) must allow the co-location on their premises of competitors' equipment to the extent that the equipment is "necessary" for interconnection or access to unbundled network elements (UNEs). The FCC, in promulgating regulations to implement the act, issued the Co-Location Order 18 months ago.

The Co-Location Order required ILECs to permit competitive LECs (CLECs) to co-locate equipment that was "used or useful" for interconnection or access to UNEs, "regardless of whether such equipment includes a switching functionality, provides enhanced service capabilities or offers other functionalities." The ILECs held that the FCC exceeded its mandate and brought the matter before the U.S. Court of Appeals for the District of Columbia Circuit. The circuit court upheld most of the order but remanded to the FCC the "clarification" of its interpretation of the word "necessary."

Since the original order, the parties have changed a good deal. GTE - a party to the litigation - merged with Bell Atlantic to become Verizon Communications, SBC Communications entered its first four markets as a CLEC and Qwest Communications became an ILEC in 14 states by virtue of its purchase of the former U S West.

The ILECs ask, essentially, what part of "necessary" the CLECs don't understand. Equipment that does anything other than interconnect or provide access to UNEs is not necessary, they maintain, and ILECs shouldn't have to let CLECs stick it in their central offices (COs). Such equipment includes routers, ATM and frame relay switches and anything that comes under the catch-all phrases, "multiservice switches" or "multifunction devices."

"That was our position all along - that we should not have to provide access to advanced services," said Steve Inman, director of regulatory affairs for BellSouth."When you start providing access for advanced services, you have to ask what that means. I think it means that people would be bringing Internet equipment into central offices. That could be a considerable amount of equipment, and space is limited."

In addition, ILECs argue that equipment is heavy, sucks up a lot of power and runs hot enough to require a lot more air conditioning, which also sucks up more power.

The CLECs argue that the law should be interpreted more broadly to let them offer advanced services with equipment co-located in ILEC COs. CLEC spokespeople concede that ILECs generally allow them to co-locate equipment in ILEC COs, sometimes without inquiring too closely as to the equipment's precise function. CLECs say they are not worried about having their gear tossed out if the FCC agrees with the ILECs. What they're worried about is being able to co-locate next generation, multifunction equipment.

"Multifunction equipment - that's what [the ILECs] are trying to exclude," said Jason Oxman, senior government affairs counsel for Covad Communications. "Take an integrated DSLAM and packet switch; that's a classic example.A DSLAM has to be in the CO because DSL is distance-sensitive. The ILECs say we can do that. But if we have a piece of equipment... that also has a switching capability - so it can move traffic between DSL and ATM, for instance - their position is that we can't co-locate that because we've tainted the equipment."

It isn't likely that the FCC will wholly adopt the ILEC view on this issue, but to the extent it does, CLECs are vulnerable, observers say.

"It would not be a good thing... in an almost terminal way for some carriers," said Terry Barnich, president and CEO of New Paradigm Resources Group, a Chicago-based telecom consultancy."I am not particularly conversant with the nuances of the filings, but just from what I've seen, this will be a pretty substantial blow to the cap ex budgets for a lot of these CLECs."

CLEC lawyers contend that whatever Congress meant or didn't mean back in 1996, it certainly meant to encourage competition and that a liberal interpretation of the word "necessary" is, well, necessary to accomplish that goal.

"In order to compete, we need to get certain multifunction equipment inside COs," said Gale Kalitsi, regulatory counsel for Focal Communications."Vendors don't make single-function equipment any more. The definition of `necessary' should be flexible. It should include the equipment that we need to compete. The DC Circuit suggested `indispensable.' That's not quite what we need for competition."

ILECs also are concerned about the interconnection between CLECs that occurs in their COs. In that case, they contend, the CLECs basically use ILEC buildings to keep their routers out of the rain while skirting ILEC networks altogether. The FCC Co-Location Order permits this, but the circuit court took a different view in its remand:"This will not do," the circuit court ruled. "The statute requires LECs to provide physical co-location of equipment as `necessary for interconnection or access to unbundled network elements at the premises of the local exchange carrier,' and nothing more."

Unsurprisingly, the CLECs are out of sympathy with these arguments. Equipment is getting smaller, not heavier, they say. Space is not an issue; the statute, they say, does not require ILECs to make space available where there is none. And power?

"We pay for that power," said Jonathan Askin, general counsel for the Association for Location Telecommunication Services. "We pay significantly more than the power actually costs. We pay for a lot more power than we're ever going to use."

Covad's Oxman is confident. He sees the fact that Qwest and SBC now find themselves on both sides of the argument as a crack in a once-solid monopoly wall.

"The wall is going to come crumbling down when one [ILEC] says,`I'm going out of region, guns blazing, and I'm going to stop advocating anticompetitive rules,'" Oxman said. "When that happens, it'll be a great day - for everybody but regulatory lawyers, anyway."