AT&T, CompTel throw support behind NARUC’s UNE plan

AT&T and the Competitive Telecommunications Association (CompTel) both filed comments with the FCC supporting a plan advanced last week by the National Association of Regulatory Utility Commissioners (NARUC) for determining the future makeup of the unbundled network element (UNE) list.

The NARUC plan calls for the FCC to establish a generic national list of unbundled network elements, but allow state commissions to add or subtract from the list.

However, the plan also calls for the establishment of three zones ranging from zone one (urban) to zone three (rural). UNE switching for large high-volume business customers in zone one would be eliminated. Whether switching is made available to business customers in zones two and three and residential customers in all three zones would depend on a market-specific analysis conducted by state commissions. The plan also would grant the states “considerable discretion” in terms of establishing a transitional timetable for the elimination of a network element.

In its comments, AT&T said state commissions must be allowed to determine whether competitive carriers would be impaired in providing local services should a network element be eliminated from the list, due to a “myriad of factual circumstances,” most notably cost differences, that exist in each state. CompTel concurred, saying it doesn’t believe the FCC has “the resources or the expertise” to conduct the granular impairment assessments mandated by the U.S. Court of Appeals - D.C. Circuit. CompTel said a “great degree of variation in markets and sub markets” exists between states and across network elements.

AT&T further said allowing the states to make the call is consistent with the D.C. Circuit's instruction to the FCC that it needed to apply more granular analysis to its policies. In addition, the Supreme Court recognized, in its review of the FCC’s local competition and UNE remand orders, that state commissions have the right to add elements to the FCC’s “minimum” list on a case-by-case basis, according to AT&T.

However, allowing the states to make impairment determinations even if the FCC were to provide a clear and concise set of guidelines would work no better than the states’ uneven application of the FCC’s TELRIC pricing formula used to set UNE rates, said Bob Blau, vice president of governmental affairs for BellSouth.

“AT&T has said, ‘We don’t care what the TELRIC discount comes to, if you want us in the residential market, you have to give us a 45% discount,’ and some of the states have gone along with that,” Blau said. “Are those same guys going to apply the necessary-and-impair test exactly the way the FCC wants it done? I don’t think so.”

There’s a very good chance Blau and the rest of the telecom industry will learn the answer to that question soon, as Commissioner Kevin Martin reportedly has struck a deal with fellow commissioners Michael Copps and Jonathan Adelstein that looks very similar to the NARUC Plan. The question now is whether Martin withers under the intense political heat that’s being put upon him.

Washington sources said FCC Chairman Powell is livid over the reported deal, which would derail his own proposal to eliminate competitor access to incumbent facilities after a transition period, and eliminate access to UNE switching and interoffice transport immediately on a national basis. Powell’s proposal contains no role for state commissions, according to sources.

“Powell has consistently said that it is his reading of the law, and the court’s reading of the law, that it is the FCC’s responsibility to decide what is impaired,” Blau said.

The fact that Martin – theoretically an underling – holds all the cards at this point has rankled Powell. “This makes it look like Powell can’t lead,” said one source. Consequently, sources expected Powell to put pressure on Martin over the next few days to get him to move back closer to Powell’s position.

Martin also is getting pressure from Capitol Hill. Reportedly, Martin has been summoned twice in the past week to the offices of Rep. Billy Tauzin, R-La., who chairs the House Committee on Energy and Commerce. “Tauzin sent the message that Republican commissioners should vote like Republicans,” said one source.

The message would be consistent with statements made by Tauzin last week during a committee meting on the health of the telecom sector. Tauzin, who called the current rules that allow competitors to lease incumbent facilities “perverse,” said the FCC should “pull those rules out by the roots” and eliminate UNE-P and prevent new facilities, “especially fiber” from becoming subject to unbundling.

“At the very least, our Republican FCC Commissioners should want a wholesale change to the overly-regulatory approach taken by Al Gore and [former FCC Commissioner] Reed Hundt,” Tauzin said.

However, Martin has a considerable amount of political cover, according to sources. His wife works on the staff of Vice President Dick Cheney, and Martin worked on President Bush’s election campaign. In addition, the Bush administration is unhappy with Powell’s proposal, preferring that the states have a greater role in determining the rules governing local competition, according to published reports. In addition, the administration reportedly is concerned that Powell’s plan could force some competitive carriers out of business, which would further weaken an already shaky economy.

Note to readers: The original version of this story defined "large high volume customers" as those provisioning tens of thousands of access lines via UNE-P, such as AT&T and MCI WorldCom. Telephony regrets the error.