PACE COALITION FIGHTS FOR UNE-P PRESERVATION
Group of competitive telcos that use platforms of unbundled network elements (UNE-P) issued report Tues. that found UNE-P is growing rapidly, acts as mainstay of small CLECs and customers and doesn’t deter buildout of facilities- based CLECs. PACE (Promoting Active Competition Everywhere) Coalition said at news conference that report will be part of its stepped-up lobbying effort to discourage FCC from reducing list of acceptable UNEs. FCC is reviewing list as part of Triennial UNE Review proceeding and Bell companies have urged agency to drop some elements, such as switching. UNEs are parts of Bell networks that have to be shared with competitors. Group said they also are urging FCC not to preempt state regulators’ ability to add to FCC’s UNE list or to retain any elements that FCC takes off national list. Telecom Act makes it clear that Congress intended states to have that flexibility, said Z-Tel Vp Thomas Koutsky. PACE members noted that state regulators have expressed similar view to FCC on their legal right to develop their own lists.
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Coalition said its study showed: (1) Number of UNE-P lines grew 14-fold in 2-1/2 years -- to 7.7 million in June 2002 from 489,000 in Dec. 1999. (2) UNE-P competitors represented about 1/3 of new entrants operating in Dec. 2001, up from about 6% in Dec. 1999. At same time, facilities- based entrants have grown to 32% from 27%, which PACE group said shows UNE-P doesn’t harm growth of facilities-based competition. (3) UNE-P services are critical to providing competition in residential and small business segments. “UNE-P carriers are the growth engines of local competition,” said Peter Karoczkai, PACE Coalition chmn. and senior vp of InfoHighway Communications. (4) Six states that have actively supported UNE-P service -- Ga., Ill., Mich., N.Y., Pa. and Tex. -- account for 77% of UNE-P based competition in U.S., which PACE said shows UNE-P competition can flourish in right regulatory environment. (5) Although often associated with AT&T and WorldCom, UNE-P also is used by many small entrants to quickly offer full service packages and compete with incumbents. In June, WorldCom had 29% share of UNE-P business, AT&T 28%, and other, smaller new entrants 43%, study said.
“UNE-P is a bright spot in the telecommunications industry and we're not going to go away gently into the night” because FCC’s review represents “critical juncture” in UNE-P development, Koutsky said. Karoczkai said use of UNE platform “has emerged as the main entry strategy for competitors” and without it “there will be no local competition” for small business. “We serve underserved customers in underserved areas,” said Don Ballard, dir. of public policy for Access Integrated Networks, which generally operates in small towns in southeastern U.S., concentrating on small business customers. It’s not true that PACE carriers don’t have their own technology, they just choose not to duplicate circuit switched technology developed by Bells, Karoczkai said. Instead they provide add-on technologies to enhance and improve customer services, he said. PACE news conference included appearances by small business customers who said PACE competitors gave them better service and cost savings. Motel owner said new company made it easier to reach customer service, real estate company accountant said competitor offered better billing service and general contractor saw cost savings that he could put back into his business.
ILEC representatives disputed PACE’s characterization of UNE-P value. “PACE has forgotten that UNEs were intended to promote local market entry in order to spur healthy facilities-based competition,” SBC spokesman responded. “Unfortunately, competitors have built a reliance on UNEs at the expense of sustainable competition.” As more states “cut UNE rates below the cost to build the network, what impact will this have on the ILEC’s ability to make future investments in new networks or even to maintain the existing facilities,” he asked. USTA spokeswoman said that “as we have seen repeatedly in the telecom sector over the last several years, competition based on artificially low UNE pricing is not sustainable over the long term.” She said “whatever benefits consumers might see today are short term and illusory, at best.” If rules are changed to offer incentives for all telecom providers to invest in network infrastructure, “the entire economy will soon see the benefits of real competition,” she said.