MAINTAINING BALANCE

Last month's decision regarding the future of local telephone competition was the most complex of my tenure at the FCC. Throughout the decision making process, I believed we needed to craft a package of balanced regulations — one that would help encourage investment in next-generation broadband infrastructure, and preserve local competition by maintaining access to the elements of the incumbent network that are essential for competitive services.

Consistent with the 1996 Telecom Act, where facilities-based competition exists, we should deregulate. When markets are not yet open, however, regulations should continue to ensure that competitors can provide services to consumers. Competition first, then deregulation.

I believe that our decision in the Triennial proceeding achieves such a principled, balanced approach. We deregulate broadband where there is competition from cable, making it easier for companies to invest in new equipment and deploy the high-speed services that consumers desire. We preserve existing competition for local telephone service — the competition that has enabled millions of consumers to benefit from lower telephone rates. And we accomplish these goals in a manner that is consistent with the statute and the rulings of the courts.

The FCC's order provides sweeping regulatory relief for broadband and new investments. Today, cable and DSL providers compete vigorously for new residential customers. In fact, cable operators are the predominant providers of residential broadband; about two-thirds of all broadband consumers subscribe to cable, not DSL. Yet it has been the incumbent phone companies — not the cable operators — required to unbundle their networks.

The order removes unbundling requirements on newly deployed fiber to the home, allowing for deployment of infrastructure to provide the broadband and video services of the 21st century. It provides regulatory relief for new hybrid fiber-copper facilities, deregulating the fiber and new packet-based technologies that provide broadband services today. Finally, the order adjusts the TELRIC or “wholesale” prices for all new investment in equipment.

Companies seeking to push fiber further to the home and deploy new infrastructure will now have the opportunity. More consumers will be able to enjoy the speed and applications that a true broadband connection offers. The decision also preserves and encourages local competition.

The 1996 act requires that competitors have access to pieces of the incumbents' networks when they are “impaired” in their ability to provide service. The Court of Appeals has made clear that in analyzing impairment, “uniform national rules” may be inappropriate. Rather, the commission should take into account specific market conditions and look at specific geographic areas. The FCC's order follows these admonitions by putting in place a granular analysis that recognizes that competitors face different operational and economic barriers in different markets. The barriers competitors face in trying to compete for residential customers in Manhattan, Kansas, are different from the barriers faced to compete for business customers in Manhattan, New York.

Some of my colleagues wished to end the unbundling of all residential switching immediately. I believe such action would be inconsistent with recent court decisions and the state of competition in many markets. To declare an immediate end to the unbundling of all switching in every U.S. market would ignore the court's mandate for a more granular analysis and effectively end residential competition.

The commission's market-specific impairment analysis provides an important role for the states. Assessments of whether access to an element is necessary to provide service may vary significantly among different markets, states, and regions. I believe that the states are better positioned to make the highly fact-intensive and local “impairment” determinations required by the Court of Appeals.

The FCC's order achieves a balance that provides regulatory relief for incumbents' new investment in advanced services while ensuring that local competitors have the access they need to provide service to consumers. I believe these steps will benefit consumers and the industry.