FCC action in Triennial UNE Review probably will be favorable to ...

magnitude and speed of the victory” because details are complex and likely to play out over time. “Large gains in Bell stock value premised on a quick and dramatic victory in the Triennial Review appear to ignore that the bulk of the systemic revenue drain off the Bell networks is due to wireless and Internet substitution, not UNE-P, in our view,” report said. “We think that some have exaggerated both the extent of the policy changes and their impact on industry profitability.” Report cited recent news coverage of Triennial Review that anticipated “huge win” for Bells, saying such reports could create “headline risk” for telecom stocks. Such risks could continue with Jan. 14 Senate Commerce Committee hearing on local telecom competition and broadband, report said, where all 5 comrs. will testify on upcoming proceedings. While report said such hearings rarely produced significant insight on policy developments, answers from comrs. could provide clarity on several UNE questions, including: (1) Relevant markets. Question of whether market for UNEs is national or “subnational,” along with proper regulatory approaches to business, residential, urban, rural and suburban markets, could provide insight into Commission’s direction. (2) Preemption of states. Comrs. could be asked what role states should play in maintaining UNEs. (3) Provisioning. Do comrs. believe adjustment in hot-cut process is necessary? (4) Treatment of switching after elimination. Will comrs. support continued access to switching under different pricing regime? “We think a clear road map from the FCC commissioners is unlikely to emerge Tuesday, but there is some chance they will provide further hints, which could spark new headlines and stock fluctuations,” report said. “And if a majority clearly surfaces on at least some of the above questions, we think that such market movements might this time be more justified.” Hearing is scheduled for 9:30 a.m., Rm. 253, Russell Bldg.