AT&T: UNE-P is spawning ‘mass-market’ competition

AT&T General Counsel Jim Cicconi told the FCC in a letter submitted today that the unbundled network element platform (UNE-P) is creating “mass-market” competition that will disappear if the commission decides to eliminate competitive carrier access to the platform.

Cicconi said carriers utilizing UNE-P would serve about 11 million residential and small business access lines by the end of the year. This contrasts with the 8.8 million lines served via UNE-P at the end of Q3 2002 – a 17.3% increase over the same quarter in the previous year – according to the Pace (Promoting Active Competition Everywhere) Coalition.

Cicconi added that these customers are located not just in high-density urban areas, but also suburban and rural areas. The Bell companies have criticized competitive carriers for cherry-picking more lucrative urban and business customers and ignoring high-cost rural customers, which the RBOCs must serve as carrier of last resort.

Additionally, Cicconi accused the Bells of trying to change the rules of the game now that they are close to gaining FCC approval to provide long-distance services in their respective regions. He questioned this stance in light of the Bells’ use of facilities furnished by AT&T and other long-distance providers to offer their own branded long-distance services.

“In the end, the Bells’ rhetoric is designed to lead the FCC down the path of eliminating the one local entry mechanism that affords competitors the local equivalent to equal access to compete for mass-market residential and small business customers – the UNE platform,” Cicconi said.

He predicted that AT&T would be unable to serve residential and small business customers without access to the platform, “in the face of the manual hot cut process,” and would be relegated to serving large business customers at “the DS1 level or above.”

A United States Telecom Association spokeswoman characterized Cicconi's letter as "just another attempt by AT&T to cling to the failing status quo," in order to continue using "other carriers' investments" without taking any risk of its own.

"UNE-P doesn't bring real competition to the marketplace, it creates only virtual competition and we believe consumers and the industry deserve the real thing," she said.

A BellSouth spokesman said the carrier does not object to UNEs, but to the platform, which he said was never contemplated by the Act.

"No one is trying to limit AT&T's access to the Bell network. We are asking the FCC to enforce the "necessary and impair" clause of the Act," he said. "There are thousands of switches available to anyone who wants to buy switching at a competitive price. The debate is over the price of network elements, not their availability. In fact, we welcome AT&T's wholesale business at a negotiated price above our actual cost."

He further contended that AT&T was not expected to subsidize its competition when the long-distance market first was opened and said that local exchange carriers likewise should not be expected to subsidize interexchange carriers such as WorldCom or AT&T.

"AT&T seems to forget that the discount which its competitors got for interconnection was because of the inferior access the competitors obtained. AT&T competitors made their customers dial extra digits to get a long-distance dial tone," he said.

BellSouth's spokesman added that it was only under that regime that long-distance competitors received a steep discount.

"And even that discount was never below cost, as UNE-P prices are," he said. "After equal access (Dial 1) requirements were placed on the local telephone industry, discounts offered by AT&T were at rates set by AT&T, not rates mandated by the government and, at any rate, not below cost."