LOOPS AND LOOPHOLES

The broadband deregulation rules issued after the FCC's recent triennial review could rob consumers of affordable, innovative broadband offerings.

The FCC decision exempts packet-switching over hybrid fiber/copper loops from unbundling requirements, meaning that competitive local exchange carriers will not be able to lease a packet-switching transmission path from the Bell companies as an unbundled network element. Instead, the FCC said CLECs could purchase DS-1 and DS-3 loops using time division multiplexing technology. Three commissioners adopted this packet switching/TDM dichotomy in a last-minute political compromise designed to appease the Bells. In so ruling, the FCC unwisely endorsed the Bells' argument that they needed a deregulatory “incentive” to upgrade the local loop plant with packet switching technology.

This packet switching/TDM dichotomy is artificial and does not work. First, there is no basis in the law or public policy to grant the Bells a monopoly on loops delivered over packet-switching technologies. Cost savings — not deregulation — is what drives the Bells to upgrade their loops.

Furthermore, there is no operational distinction between “packet switching” and “TDM loops.” The Bells provide DS-1 loops over a variety of broadband loop technologies, including straight TDM, DSL, and circuit emulation over ATM over Sonet (which is TDM). Often, these loops are provisioned over the same equipment, making any TDM vs. non-TDM distinction impractical. This ambiguity could give the Bells an excuse to refuse CLECs access to DS-1 and DS-3 TDM loops provisioned over any hybrid fiber/copper multi-service access system using packet-switching technology.

Moreover, even if there were a neat operational distinction between TDM and packet switching, it is far too easy for the Bells to engineer their networks to evade their obligations to provide unbundled local loops. Absent clear rules, the Bells could simply employ DS-1 and DS-3 circuit emulation over ATM transport between the central office and remote terminal and claim that this eliminates their obligation to provide CLECs with unbundled access to DS-1 and other loops over this particular system. This would create a huge loophole, allowing ILECs to refuse essential DS-1, DS-3 and other loops to CLECs at will.

Today, roughly 30% of consumers are served by such hybrid loops. Taking one-third of the addressable market away from the CLECs would deprive consumers of competitive broadband options.

To avoid this, the FCC should first abandon its decision to create a Bell monopoly over loops provisioned with packet-switching technology. If the FCC is determined to eliminate unbundling of packet-enabled loops, it also should clarify that CLECs can continue to access the DS-1 and DS-3 loops they obtain today regardless of loop technology. CLECs also must be allowed to access the raw loop transmission facilities, and to attach or virtually co-locate their own line cards or other advanced electronics. CLECs may currently connect homerun copper loops to interoffice fiber transport, even if the interoffice fiber segment is obtained as a service rather than a UNE. The fact that the interface between the copper and the fiber is now a remote terminal rather than a central office must not preclude CLEC access to the bottleneck transmission path.

Finally, if the ILEC decides to discontinue operation and maintenance of copper infrastructure in a wire center, it must make available equivalent DS-1 and DS-3 loop facilities to CLECs. Such measures would help ensure that CLECs can provide their existing services and will prevent mischievous “re-engineering” of the network.

Facilities-based CLECs — using their own smart technology on top of ILEC-provided dumb pipes — have driven innovation and created new products and markets. The Bells have since responded by launching comparable offerings. Without CLEC competitive pressure, ILECs have no incentive to innovate. And without CLEC equal access to hybrid loops, consumers will be denied the substantial savings and innovation promised by competition.

Jonathan Askin is general counsel for ALTS, a national industry association that promotes facilities-based local telecommunications competition.