FCC REVISES COLOCATION RULES IN EFFORT TO GAIN ‘BALANCE’

(1) Revised test for what competitive equipment is “necessary” for colocation as required by Telecom Act. FCC said equipment would be considered necessary if inability to deploy it would “as a practical, economic or operation matter” preclude competitors from obtaining interconnection or access to unbundled network elements (UNEs). Court had questioned original rule that permitted broader range of equipment. Commission said multifunction equipment would meet this “necessary” standard only if its primary purpose would be for “equal in quality” interconnection of “nondiscriminatory” UNE access. It said switching and routing equipment typically met that standard because inability to deploy it might preclude competitor from nondiscriminatory access to local loop UNE. However, ILEC wouldn’t have to allow colocation of large circuit switches instead of more advanced switching and routing equipment, FCC said.

(2) Replaced original rule guiding cross-connects with “less invasive” rule that said cross-connects were allowed if done by incumbent. That meant competitors couldn’t do their own cross- connects within ILEC office but they could ask ILECs to do it for them. Cross-connection permits colocating carrier to connect its equipment with another colocating CLEC.

(3) Eliminated some physical colocation requirements. FCC said that, in effort to better protect incumbents’ property rights, competitors no longer would have right to pick their own colocation space and instead incumbents could make that decision as long as it was done in nondiscriminatory manner.

Commission voted 4-0 with Comr. Abernathy recusing herself because she hadn’t completed divestiture of her common carrier assets. She said process should be completed by agency’s Aug. 9 agenda meeting. At his first agenda meeting, Comr. Martin concurred on part of item because he was concerned whether cross- connection portion could withstand legal challenge.

Competitors greeted decision favorably while USTA issued statement saying it was disappointed. ALTS Gen. Counsel Jonathan Askin said decision offered “balanced approach” that would provide nondiscriminatory access to facilities and pass legal scrutiny. ALTS interpreted decision as providing “legal rationale” sought by court without curtailing competitors needs. “Now that we know the rules of the road for colocation, we are that much closer to a truly competitive marketplace,” Askin said. CompTel Pres. Russell Frisby said FCC action “cements a fundamental building block in the future of telecommunications competition.” However, USTA Vp Lawrence Sarjeant said FCC order “appears to unnecessarily expand the obligations of incumbent local exchange carriers beyond the requirements of Sec. 251 (c)(6)” of Telecom Act.

On another item, FCC voted to begin proceeding to streamline nondominant carriers’ requests to transfer transmission lines because of changes in corporate control. Agency asked for comment on what criteria should be used to determine whether transfer was eligible for streamlining. FCC staff said transfers of Sec. 214 authority by nondominant carriers rarely raised “significant concerns” and thus agency decided to look into streamlining. FCC issued related ruling clarifying that any carriers, including nondominant ones, had to get Commission approval to transfer transmission lines before completing merger or acquisition.

Also at meeting, FCC’s International Bureau told Commission that consumer telecom prices had fallen remarkably in last few years as competition had grown, more foreign carriers had bought into international competition agreements and carrier-to-carrier settlement costs had dropped. Bureau’s study, Transition from Cartel to Competition, said some international calling plans offered prices as low as 7 cents per min. to Canada and 9 cents to Britain. Agency said it planned to develop consumer education plan to explain value of using calling plans to get low prices. Importance of encouraging other countries to adopt FCC’s competitive model can’t be overstated, Comr. Abernathy said.

Verizon spokesman said new colocation rules might require FCC to reconsider another issue -- types of UNES that ILECs had to make available to competitors. In particular, switching and transport over high-capacity loops no longer appeared to be needed as UNEs, spokesman said. That’s because requiring ILECs to provide cross-connect services makes it more feasible for competitors’ to use their own high-capacity lines and allowing competitors to locate certain types of switching in ILEC offices “confirms that access to switching services has become ubiquitously available from alternative providers,” spokesman said.

Covad said rules would translate to lower costs for competitors and better consumer service. For example, CLECs will be able to colocate packet switches in ILEC central offices instead of paying rent to locate them in separate facilities such as colocation hotels, Covad spokesman said. Requiring ILECs to provide cross-connects in central office “allows CLECs to lease bandwidth from other CLECs within the colocation space rather than having to rely on leasing excess ILEC bandwidth or leaving the [central office] to cross-connect in a 3rd location,” he said. Covad Gen. Counsel Jason Oxman called decision “very procompetitive, very consumer friendly.”