LINES CONTINUE TO BE DRAWN OVER PENDING TRIENNIAL REVIEW ORDER

FCC Comr. Martin said ultimate outcome of decision still was hard to predict. “It will have a balance that will try to incorporate incentives for incumbents to be investing in new infrastructure and new deployment,” he said. “It will also have a balance toward allowing competitors to have access to some of the essential elements.”

Among other national standards for UNE reform that Seidenberg stressed were: (1) Removing switching from list of required UNEs. (2) Eliminating business UNE platform (UNE- P). “I believe over the last 10 years it’s very hard to argue there’s not sufficient competition in the business market,” he said. Seidenberg said he made distinction between UNE-P in residential and business markets “because we definitely don’t want to see ink in the pool on the business side.” (3) Shifting away from UNE-P in residential market “over time.” (4) No “backsliding” on UNE rules for special access. (5) No “old regulatory rules in the broadband space.” Asked whether capital expenditures would increase in wake of potential UNE relief, Seidenberg said that in 12-24 months after regulatory action providing relief, there would be more “confidence” on part of software providers, applications developers, equipment makers and others to start to step up deployment efforts. “But there’s no switch here,” he said. “It has to be based on sustainable, technological differentiation. I don’t think anybody would argue that DSL isn’t a long-term answer to broadband. So we know what the answer is.”

Martin acknowledged he had been “outspoken” in his emphasis on importance FCC should place on advanced services and infrastructure issues. Echoing themes he has raised in previous speeches, he said Commission should attempt to adjust some of TELRIC pricing on investment. He also underscored point he made in Dec. speech that incumbent service providers should be freed from legacy rules when building to fiber-to-home for new construction. “Those will continue to be a topic of priority,” he said. “We'll try to do something even on the circumstances in which they push fiber even further out into the network, even when it doesn’t involve fiber-to-the-home and provide some other kind of regulatory relief.”

In both media and telecom regulatory arenas, one of most underappreciated policy issues is meaning of word “necessary,” Martin said. He has raised issue in several proceedings, including one last year that made changes in cellular service rules, and on legal standard used as part of Commission’s biennial review under Sec. 11 of Communications Act. In that order and elsewhere, Martin said he was concerned by failure to discuss legal standard of Sec. 11 under which FCC must determine in biennial reviews whether regulation no longer was “necessary in the public interest” as result of meaningful competition between providers. Meaning of “necessary” has surfaced in biennial review obligations, forbearance petitions and unbundling obligations, in which FCC must unbundle what no longer is necessary, Martin said.

“There has become an increasing emphasis on our implementation of that and what that word means,” he said. “I think it could have a significant impact on the way that we are addressing some of our regulations.” He cited example of wireless local number portability requirements, in which wireless industry sought FCC forbearance last year. Question was what was standard for what “necessary” meant. “Does it mean something is truly essential or does it mean something is just useful or helpful,” he asked. “The distinction between those 2 meanings could have an important significance. If we're supposed to get rid of rules that are no longer necessary but necessary just means useful or helpful, I think the Commission has a lot more latitude. On the other hand, if it means we can only keep things that are essential in light of the competition that is there, that is a more significant burden that the Commission must face.” CTIA and Verizon Wireless have challenge pending before U.S. Appeals Court, D.C., on how biennial review standard was applied in FCC decision to deny forbearance on wireless LNP. In case of biennial review, FCC has obligation to make factual finding that there actually is competition, Martin said. “This issue is one that you will see played out at the Commission.”

Expected action next week by FCC in its Triennial Review was part of debate throughout day. Several tech and telecom trade association presidents championed likely decision by FCC to deregulate Bells. “ILECs are spending the bulk of [capital expenditures],” TIA Pres. Matthew Flanigan said, but in recent years that cap on spending “has dropped to maintenance levels.” Likely Feb. 13 order is “important at this time,” he said, and there clearly has been “a market failure” in 7 years since Telecom Act. Information Technology Industry Council (ITI) Pres. Rhett Dawson said his members could “yield benefits” from likely decision. Precursor Group also is in favor of deregulation, but Information Technology Assn. of America (ITAA) Pres. Harris Miller said “we're not in favor of Powell’s decision.” Miller also differed from his colleagues in doubting that deregulation would have stimulative effect on IT spending.

Computer Systems Policy Project Exec. Dir. Ken Kay said spectrum debate had moved beyond service providers. He said Motorola had joined CSPP 2 years ago and had been “going to Congress saying this is not just a service provider issue,” adding that Dell, IBM and Hewlett-Packard were “very important players in the push for more spectrum.” Increasingly untethered nature of PC and CE equipment are driving spectrum debate, Kay said. On separate panel, CEA Pres. Gary Shapiro echoed Kay, saying “we need more unlicensed spectrum” for growing array of wireless CE devices, particularly Wi-Fi devices. TIA’s Flanigan called Wi-Fi “a very hot area.” ITI’s Dawson praised “real breakthrough” reached last Fri. on unlicensed spectrum in 5 GHz band. Referring to Dept. of Defense interference concerns, Dawson said “we thought they were going to hunker down and roll into their foxhole” but instead they agreed to compromise. He called deal “a good start.”

Sometimes-heated exchanges emerged in day-long conference on Triennial Review, with one participant saying that if it were placed on agenda for Feb. 13 open meeting, sunshine period of restricted lobbying would kick in later this week. USTA Pres. Walter McCormick said draft recently circulating was nearly 400 pages. Asked about impact of decision, ALTS Pres. John Windhausen said outcome would be “huge” for competitive carriers but relatively minor for ILECs. Citing earlier statement by McCormick that uncertainty in that area had meant stock volatility at different times, Windhausen said: “CLECs are used to having their stocks rise and fall 50%.” He said many now were trading below $1. He said industry had had to come in and “rejustify every single network element” in terms of why it should continue to be on list. “For our industry, it’s a life-or-death set of issues,” Windhausen said. McCormick said UNE regime was “failed experiment,” proof of which was borne out by extent to which other regulatory sectors hadn’t sought to emulate it to boost competition.