Martin: FCC likely to take market-based approach to UNE-P revisions

While saying that it was still too early to know what the FCC ultimately will decide when it concludes its triennial UNE review, FCC Commissioner Kevin Martin today hinted that the commission is more likely to take a market-driven approach toward revamping the platform than to issue a blanket order.

Martin, speaking during a press briefing at FCC headquarters, said the D.C. Circuit’s decision that remanded the commission’s line-sharing and local competition orders is weighing heavily on the review. That decision is forcing the commission to look at unbundled network elements in terms of how they would apply in any given market, taking into account competitive alternatives such as whether CLECs have deployed switching facilities that they or other users could be utilizing.

For instance, according to BellSouth, five switches owned by competitive carriers currently are sitting idle in New Orleans because CLECs can purchase switching from BellSouth via UNE-P for less money.

“The D.C. Circuit [decision] is requiring us to look at this at a more detailed level, in terms of what those elements should be,” Martin said.

A primary question being contemplated by the commission, according to Martin, concerns whether UNE-P is going to be phased out, and will that phase-out occur on a national or market-by-market basis? Incumbent carriers, particularly the Bell companies, have argued that switching represents a national market and should be removed from the platform, but Martin said the commission would consider the D.C. Circuit’s intent before making the final determination.

“We’re still trying to evaluate the arguments on both sides, but the courts seem to be requiring us to take into account the kinds of factors that look like they vary from market to market,” Martin said.

Should the commission opt for a market-based approach to an overhaul of the platform, Martin predicted a continued significant role for state commissions, which have feared federal preemption of their authority, particularly should the commission issue a national edict.

“The states generally have been a good partner to the commission in evaluating local competition, and they’re certainly well situated to make these kinds of decisions,” Martin said.

Martin also discussed the universal service fund and broadband deployment. He said he would prefer that the commission reform the revenue-based assessment model before considering the connections-based plan advanced as a means to increase contributions to the fund in the face of shrinking long-distance revenues. Specifically, Martin wants the “lag” that penalizes long-distance companies and favors incumbent telcos addressed.

Because contribution levels are set at six-month increments, long-distance carriers whose revenues decline over the next six months actually pay more into the fund than their current revenues require, said Martin. Similarly, incumbent carriers entering long-distance that see their revenues increase over the ensuing six months pay less than their fair share into the fund.

Should it become clear that the revenue-based model is no longer workable, Martin said the commission should consider alternative plans in addition to the connections-based plan, such as one based on the number of telephone numbers a carrier has. Martin said such a plan would engender number conservation – carriers would no longer hoard tens of thousands of numbers they aren’t going to use – and take into account any migration to Internet telephony.

“If you receive an Internet telephony call, you still have to have a telephone number, and if you’re making a call you still have to access the switched telephone network, and the key to accessing the network currently is having a telephone number,” Martin said. “That would be a way of getting capturing the migration to IP telephony without assessing every broadband connection.”

Martin is opposed to extending the USF contribution obligation to broadband services – some have suggested that cable modem users should pay into the fund – because it would act as an Internet access tax on consumers. He further said that direct tax credits for broadband deployment is a broader policy issue that needs to be decided by Congress and the Bush administration, but added that government at all levels needs to remove barriers to broadband deployment. He said any taxes and fees applied to broadband would run counter to that goal.

“The commission has to make sure it doesn’t apply universal service fees and obligations to broadband deployment, but municipalities also have to make sure they’re not [looking at] broadband as just an additional revenue stream,” Martin said. “We’re encouraging the deployment of broadband and we don’t want to be adding additional financial burdens to it … which could end up raising prices.”