ILECs, CLECs weigh in on UNE triennial review

Incumbent and competitive carriers, as well as industry trade associations, filed comments this week in conjunction with the FCC’s triennial review of unbundled network elements (UNEs). In an outcome that was about as suspenseful as a one-horse race, incumbents think the commission should make radical changes to the current rules, while competitors like those rules just fine.

In its comments filed today, Verizon said that dramatic changes in the competitive landscape over the past few years have removed any argument supporting the current rules that require incumbents to make their facilities available to competitors at TELRIC (total element long range incremental cost) prices.

Tom Tauke, Verizon’s senior vice president of public policy and external affairs, said in a statement that the current rules are “eroding” the primary goal of the Telecom Act, which was to foster facilities-based competition. “Mandatory unbundling of essentially all of the pieces of our network at give-away prices discourages network investment by all players and it undermines the investments that have been made by some facilities-based competitors,” Tauke said.

Tauke’s counterpart at SBC Communications, Senior Vice President-FCC Priscilla Hill-Ardoin, agreed. “Under today’s rules, competitors often shun investment and the associated risks and instead use our facilities to reach customers, rather than investing in their own technology,” Hill-Ardoin said in a statement.

In its comments filed today, SBC suggested that the FCC exclude from the unbundling regulation all new network investment because “competitors cannot be impaired today absent access to facilities that are not yet deployed.” SBC also suggested that the commission remove unbundling obligations from all facilities used to provide service in converging markets, including broadband, wireless and interexchange markets.

BellSouth told the FCC in comments filed today that it should reduce the current list of unbundled network elements and declare from this point on that the list can only be reduced, not expanded. It further suggested that the FCC should determine whether self-provisioning and competitive alternatives exist within a geographic-specific market, and consider whether it is feasible for those alternatives to become available.

In its filing, BellSouth repeated what has become the incumbents’ mantra: “Allowing competitors to have a subsidized ride on incumbent facilities discourages incumbents and competitors from building new facilities.”

The United States Telecom Association (USTA) echoed BellSouth’s comments concerning alternatives that are available to competitive carriers beyond incumbent facilities. In its comments filed today, the USTA said that for many elements, such as switches and transport, “there are alternative providers who offer the same services. For this reason, ILEC competitors would not be impaired if they are removed form the FCC’s list of mandated UNEs.”

The association also reminded that UNE restrictions were imposed upon the passage of the Act six years ago to “jumpstart” local competition, a goal that has been met according to USTA President Walter McCormick. “Today, the market for local phone service is very competitive and carriers have several choices for leasing network elements,” McCormick said in a statement.

Predictably, the CLEC camp doesn’t agree. Competitive Telecommunications Association (CompTel) President H. Russell Frisby said in a statement “the removal of any UNE or combination of UNEs from the existing list is a direct threat to competitive telecom providers’ ability to provide unique alternative service offerings to consumers.”

In its filing, CompTel said it “strongly opposes” any distinction between new and old incumbent facilities, as suggested by SBC. It also urged the FCC to foster broadband deployment “as directed by Section 706” of the Act, “which Congress based on the assumption that making UNEs available fosters broadband deployment by facilitating competition.”

The Association for Local Telecommunications (ALTS) said in its filing that the FCC must preserve the current UNE rules in order to protect the $65 billion invested by CLECs in their broadband networks. “Changing the list of UNEs in midstream would render this enormous investment practically worthless. It took the Bell companies over 100 years to build their networks. The CLECs need more than the six years to date to build redundant network facilities,” ALTS President John Windhausen said in a statement.

In a letter to FCC Chairman Michael Powell, AT&T General Counsel Jim Cicconi said AT&T alone has deployed more than 115 local telephone switches in more than 60 markets, established more than 1000 co-locations in incumbents’ central offices and installed more than 17,000 route miles of local fiber over the past six years.

Consequently, Ciccone said that unbundling requirements have not hindered network investment by the Bell companies or facilities deployment by competitive carriers, contrary to claims made by the Bells. As evidence he pointed to New York, which has the greatest amount of UNE platform competition, according to Ciccone, but also enjoys “enormous facilities-based competition.”