NARUC FORMS TASK FORCES TO ADDRESS UNE AND BROADBAND ISSUES

NARUC Pres. David Svanda of Mich. PSC said first task force would facilitate state implementation of FCC’s order by serving as clearinghouse and central point of contact for state coordination of their efforts to address UNE platforms and other network unbundling issues that agency’s order referred to state commissions. He said that group would be vehicle for state collaborations on regional or other basis. Second new NARUC task force will address broadband, intercarrier compensation and other major issues pending before FCC involving new technologies, changing industry structures and their effects on carriers, customers and regulators. Membership and processes for both new groups will be addressed later, once details of FCC’s order are known, officials said.

“Congress, the courts and the FCC have entrusted the states with significant [UNE] responsibilities and we will, as is our history, deliver,” Svanda said. He said 2nd task force would “focus NARUC resources on assuring the same level of open state-FCC communications in the outstanding series of critical proceedings” that FCC was scheduled to decide over rest of this year. States have had some success in past with collaborations to address shared issues, most recently with regional collaborative among Qwest states on their Sec. 271 reviews. Svanda also wrote to House Commerce Committee telling it of NARUC’s new task forces and commending FCC for its “affirmation of the critically important role states should play” in UNE evaluation. House panel has scheduled hearing this week involving all 5 FCC commissioners.

NARUC panelists said FCC’s Triennial UNE Review order almost certainly would face litigation in federal and state courts. Julie Veach, senior attorney in FCC Wireline Bureau, said UNE order would “promote increased broadband deployment and promote local competition, especially in residential voice service.” She said order also should satisfy courts that had remanded FCC’s previous UNE orders: “The courts wanted granularity, the courts got granularity. The flip side will be dispersed litigation state by state.” She said next task for FCC would be completing pending docket on whether broadband was regulated telecom or unregulated information service; agency’s goal is to issue order this summer.

Economic consultant Joseph Gillan, former Ill. regulator speaking for PACE coalition of smaller UNE-P based CLECs, applauded order for giving states leading role in deciding whether UNE switching should be retained. He said FCC’s abolition of line sharing would heighten role played by UNE-P in competition because DSL competitors would be relying on UNE-P for voice portion of their service. UNE-P is “first- generation entry strategy” that will fall away as center of network intelligence shifts from switches to databases that control switches. Gillan said. Robert Quinn, AT&T vp-federal regulatory affairs, predicted FCC’s deregulation of broadband would end up in courts shortly after full order was released. He said unintended consequence of broadband portion of order would be to make it more difficult and costly for CLECs to obtain all-electronic access to last-mile loops for mass market. Quinn said that while FCC had given states 9 months to decide whether to retain switching UNE, it wasn’t absolute deadline: “I doubt the FCC would preempt a state proceeding that’s already in progress when the 9 months is up.”

In response to question of whether states could conduct switching UNE reviews in FCC’s time frame, Gillan said Tex. regulators did similar review in 5 months in 1998. He cautioned states to be wary of Bell company efforts to use UNE switching as bargaining chip for something else they wanted: “They've traded UNEs for alternative regulation, then for long distance entry, now for broadband deregulation. The asset’s been overpledged, it’s become a Ponzi scheme.” On another question, AT&T’s Quinn said abolition of line sharing was inconsistent with rest of order: “Why not put it in with switching for state analysis?”

At later panel on FCC Triennial Review order, FCC Wireline Bureau Chief Bill Maher said order had referred to state commissions question whether competitors required unbundling of high-capacity copper loops, local transport, local switching for mass market, dark fiber. He reminded states that order’s provision to abolish line sharing would take effect over 3-year transition period that would be detailed in final order. “There won’t be a flash cut away from existing sharing arrangements,” he said. He said question whether decision preempted states that had written line-sharing and other unbundling requirements into state law would be addressed in final order but declined to discuss what document would say. He also said order would require incumbent telcos to follow due-process requirements of federal and state regulations when seeking to replace copper links to customer premises, which must be unbundled, with fiber links that generally wouldn’t be unbundled.

Bob Blau of BellSouth said uncertainty created by FCC order drove stock prices down for all major telecom players, including those little affected by UNE-P and broadband services: “Investors saw this thing as an unpredictable political process, not an economic matter, and responded by taking their money off the table.” He said telecom sector lost 10% of total value -- about $36 billion -- because of FCC’s order, with only handful of CLEC niche players recording share gains. He said industry already was on its knees when FCC order sent investors heading for exits. But Gillan of PACE disputed Blau’s analysis, saying UNE order wasn’t only reason skittish investors bailed out of telecom. He said industry had recovered some of its market losses this week and was likely to gain more. He urged states to keep in mind that UNE-P was only entry path that had been proved to work for mass residential and small business markets. Gillan said order’s most disturbing aspect was that it equated packet technology with broadband when they were not really same thing.

Jason Oxman of Covad Communications said FCC’s decision to eliminate line sharing made no sense: “Without line sharing, there'll be no broadband services from CLECs. At best, consumers will have a cable-telephone duopoly and at worst they'll have a monopoly provider or no broadband service at all.” He said FCC should have given states authority to decide on competitive need for line sharing. Jake Jennings of competitive broadband provider New South Telecom said FCC’s termination of line sharing “leaves us high and dry. We don’t want to be left without bargaining power.”