FCC asks for rehearing of DC Circuit’s UNE and line-sharing decisions

The FCC has filed a petition with the United States Court of Appeals – DC Circuit asking the court to rehear its May 24 decision that remanded the commission’s local competition and line-sharing orders.

In remanding the local competition order, the court took issue with the FCC’s decision to make its unbundling requirements “uniformly applicable” to all elements in every geographic or customer market. The court determined that this approach unjustifiably required incumbent carriers to make unbundled network elements (UNEs) available even where there “is no reasonable basis” for thinking that competition would suffer if those elements weren’t available.

In remanding the line sharing order – which required the unbundling of the high frequency spectrum of the copper loop in order to make it possible for CLECs to provide DSL service – the court criticized the FCC for failing to consider the relevance of competition coming from cable and, to a lesser extent, satellite.

However, the FCC said in its petition filed late yesterday the court should grant a rehearing because its decision “is in tension with” the recent Supreme Court decision that affirmed the TELRIC (total element long-range incremental cost) pricing formula for UNEs.

Specifically, the FCC said the court’s decision “runs afoul” of the Supreme Court’s opinion that reviewing courts “have a properly limited role … especially in a case like this one involving disputed economic arguments and a complex technical and regulatory background.”

The commission also accused the D.C. Circuit of adopting specific economic and policy assumptions the Supreme Court had rejected as a basis for imposing limitations on incumbents concerning their obligations to provide UNEs to competitors at cost-based prices. In addition, the FCC said the DC Circuit decision “appears to be inconsistent with several provisions” of the Telecom Act.

Russell Frisby, Jr., president of the Competitive Telecommunications Association, applauded the commission’s action.

“As the FCC properly acknowledged, there are clear discrepancies between the Supreme Court’s TELRIC decision and the D.C. Circuit’s decision,” Frisby said in a statement. “The Supreme Court read the law correctly. The D.C. Circuit has misread both the law and Congressional intent and, in this case, is actually thwarting the will of Congress.”

Walter McCormick, president of the United States Telecom Association, expressed disappointment at the FCC’s decision to file for a rehearing, because it would delay the commission’s currently ongoing triennial UNE review.

“Unfortunately, any delay in achieving final rules for the issues raised in the triennial review will further postpone the telecom industry’s economic recovery,” McCormick said in a statement.

– Glenn Bischoff, senior writer