FCC RELEASES TRIENNIAL UNE REVIEW ORDER

Asked about reports of changes in areas such as line sharing and triggers for unbundled switching, an FCC staffer briefing reporters late Thurs. said that when the press release on the order was issued Feb. 20, “it was clear at the time the order was being discussed at a high level.” In any order of this scope there “will be post-adoption edits,” the staffer said. “Reasonable minds could differ on the significance of those changes, whether they are relatively ministerial,” the staffer said. “The item makes clear it was consistent with what was decided on Feb. 20.”

The significance of the changes appeared to vary depending on who in industry or govt. was doing the interpretation. Some at the FCC questioned whether it was legal to make changes after the order had been voted on, but many said the changes weren’t significant enough cause a stir. Comr. Abernathy, who was in the minority on the UNE-P order, said she had some questions about making after-vote language changes but in the final analysis they “didn’t change my vote.” She said additions to the order’s language eased some of her legal concerns -- for example, on the need for a national finding of impairment at the federal level. However, she said the order’s “revised impairment framework… falls short in a number of respects” and her concerns about the UNE-P part of the order remained. Abernathy emphasized that the broadband portion of the order was very positive: “It hasn’t been emphasized enough how significant the regulatory framework encourages broadband deployment.”

Adding a national standard of 3 switched-based CLECs before states could drop switching from the UNE list didn’t appear to gain support from Chmn. Powell, who had pushed for such a standard. He said in his dissenting statement that the new language had little practical use because no markets, or at least very few, had close to 3 switched-based CLECs: “The ‘objective’ switch triggers relied upon by the majority are an illusory limitation [and] because the switching triggers are not a meaningful limitation, states are essentially free to do as they wish.” Powell, who had dissented on the UNE-P part of the order but not broadband part, said the UNE-P/switching decision represented “bad law, bad policy and ultimately bad for consumers.” In his 16-page dissenting statement, Powell said the decision “steps back from a pro-facilities policy by favoring extensive regulatory management of incumbent networks.”

The order, which will set rules for much of the telecom industry, created a great deal of dissension and a rare dissent by Powell when it was approved 6 months ago. It addressed 2 key areas: (1) UNE platforms (UNE-P). The FCC had voted 3-2, with Powell in the minority, to retain switching on the national UNE list, which meant the UNE platform remained intact. UNE-P can’t exist unless all network elements remain on the list. The agency then gave state regulators authority to determine whether switching, or any other elements, should be dropped from the list. (2) Broadband UNEs. The FCC gave Bell companies some relief from unbundling requirements for new broadband facilities, including fiber-to-the-home.

The significance of placing a network element on the UNE list is that the Bells must lease that element to competitors at TELRIC rates, which the Bells say are too low. The Bells have said they aren’t opposed to leasing their network elements to competitors as private business arrangements but competitors have said they fear those rates would be too high.

Precursor Group analyst Scott Cleland said the 6-month delay only cemented UNE-P as an option because the number of UNE-P carriers had grown, making PUCs more reluctant than ever to eliminate UNE-P as an option. “UNE-P is here to stay,” Cleland said. He also saw the order as creating “a new regulatory menace” in the form of line-splitting language. He said he saw one positive for the Commission: “Most of the changes have been to shore up the legal vulnerabilities” in the order,” which as a result “will emerge stronger legally.”

FCC Comr. Martin said he was pleased that the order “achieved a balanced approach” between offering incentives for new investment and making sure consumers were protected. The statement Martin attached to the order was the same one he released in Feb. when the agency voted on it. Some had characterized him as unhappy with the new national standard requiring states to weigh competitive choices in making decisions on retaining switching UNEs. However, Martin said he had said in the past that that was a good criterion for states to follow.

ALTS Gen. Counsel Jonathan Askin said the order “cuts both ways for the facilities-based competitive industry.” He said ALTS was pleased “the order states, in no uncertain terms, that ILECs must provide CLECs with absolute, unfettered access to DS-1, DS-3 and dark fiber loops and transport.”

AT&T said the FCC’s language on UNE would allow the carrier to continue its expansion into local markets. It said the final UNE language “demonstrates unwavering commitment to competition.” It said the order relied “heavily” on the expertise of state commissions to identify and eliminate barriers to competition. As to broadband, Robert Quinn, AT&T vp.-federal regulatory affairs, said the FCC was “far less bold” and “simply surrenders to the wishes of the incumbent telephone monopolies.” “Consumers will pay for this lack of FCC resolve in the form of higher rates, less choice and lower quality services,” Quinn said.