USTelecom Forbearance Petition Faces Cable, Wireline Opposition

The petition may be a “political masterstroke” for USTelecom, which has said it would sue to try to block a Title II approach to file the forbearance petition, said TechFreedom President Berin Szoka. Title II proponents have “blithely assured forbearance can solve concerns over reclassification, Szoka said. But the petition is a reminder that the commission refused last year to grant another USTelecom petition for forbearance, he said. This year’s petition puts Title II proponents in a difficult position, he said: “They can’t consistently both oppose this petition and argue for Title II with forbearance.”

One communications attorney, whose client opposes the petition and reclassification, did not think denial of the petition by the commission would harm the case for Title II if the agency goes that route. A denial, the attorney said, would be based on USTelecom's not providing sufficient evidence for forbearance, which wouldn’t indicate forbearance is difficult if there are sufficient grounds. Nevertheless, the attorney said, Title II opponents would likely try to use any denial of the forbearance petition to argue against reclassification, because “Title II opponents will make any and all arguments to stop Title II reclassification."

CenturyLink, ITTA and Verizon, in their comments posted Monday in docket 14-192, agreed with USTelecom that the rules are no longer justified, and would divert funds that could be used to deploy broadband, according to comments filed by Friday’s end of the petition’s comments period. Others, including, Sprint and Comptel, said USTelecom didn't back up claims the rules are no longer needed. Forbearance would weaken competition for business customers by removing regulations, making it easier for competitors to reach them, the opponents said.

USTelecom officials told reporters when the petition was filed that the association was responding to FCC Chairman Tom Wheeler’s comments on the need for more wired high-speed broadband competition. Forbearance would better position ILECs to compete with cable by easing requirements to invest in maintaining legacy networks, the officials said (see 1410070050).

The petition targets “outdated provisions” in Telecom Act Sections 271 and 272 and related equal access rules; rule 64.1903 structural separation requirements; a requirement that ILECs provide an unbundled 64 kbps voice channel where they've replaced a copper loop with fiber; Section 214(e)(1) eligible telecom carriers requirements in cases where a price-cap carrier doesn’t receive high-cost USF support; the remaining Computer Inquiry rules; requirements that ILECs share new entrance conduit; and rules that prohibit the use of contract tariffs to offer special access and high-capacity data services in the absence of pricing flexibility.

ACA opposed forbearing the FCC’s regulation of prices ILECs charge to share newly deployed entrance conduits. It’s “not a trivial undertaking for a competitive provider to build [an] entrance conduit,” ACA said in its comments. Whether it’s able to access an incumbent’s entrance conduits “makes a meaningful difference in whether a competitive provider can serve a business customer.” Instead of enhancing it, competition would be “greatly inhibited” if the forbearance from the entrance conduit regulations is granted, ACA said in a news release.

USTelecom’s petition discussed “at length” that ILECs face “extensive competition, especially from cable operators,” ACA said, but “spends a mere two paragraphs on the business markets.” Comptel said “USTelecom bemoans the loss of retail access lines [but] many of the obligations from which it seeks forbearance are wholesale obligations.” While retail competition for certain services exists at the retail level, Sprint said, ILECs “continue to wield overwhelming market power” in the wholesale market, dominating special access services and IP-based broadband services to enterprise customers. Even with “overwhelming control of the telecommunications market, the ILECs, through USTelecom, now seek even greater deregulation,” Sprint said. The opponents also said USTelecom provided nationwide data about competition but didn't provide proof of competition in different markets around the country.

Jonathan Banks, USTelecom senior vice president-law and policy, told us the national and state-by-state data it provided on competition was consistent. “I don’t think it’s helpful to the process if the FCC is unable to take sensible actions unless they have data for every town and city in the country.”

NATOA opposed all the forbearances sought by USTelecom, but singled out excusing price cap ILECs from eligible telecommunications obligations, including carrier of last resort, in areas where they don't receive CAF support. The COLR obligations are a backstop to ensure consumers in an area have a minimum level of service. The argument that all savings incurred from being free of the obligations will be used to deploy broadband is “laughable,” NATOA said.

AT&T, backing the petition, said in its comments the ETC obligations have forced carriers to “provide voice service in areas where it is uneconomic to do so.” AT&T cited other “unfunded ETC requirements like participating in Lifeline.

Backing USTelecom’s petition, CenturyLink said in its comments “ILECs continue to be saddled with a host of asymmetric regulations, based solely on the market position they held two, three or even four decades past.” If a regulatory framework were to be designed from “a blank state” today, it “would look far different than it does today,” CenturyLink said.

"Unnecessary regulation creates unnecessary costs” that “unfairly penalize incumbent LECs,” Verizon said. The regulations, Verizon said, provide “an artificial advantage to other providers including cable companies, who are now among the largest voice and broadband providers in the country.” ITTA also backed the petition and said the rules impede broadband deployment, particularly in rural areas.

Neither Free Press nor Public Knowledge filed comments on the petition, because of other proceedings, said attorneys for the groups. The FCC is “under no greater pressure” to grant the USTelecom petition because of the Title II debate, Free Press Policy Director Matt Wood told us. "If any carriers want to claim that unless forbearance is always granted, that means it's never granted, they're welcome to that utterly illogical argument,” he said. The FCC expressly grants or through inaction allows forbearance petitions to be “expressly granted,” Wood said, adding the commission should decide the “on the facts in that proceeding, not [because of] any political calculations designed to appease ISPs in the Open Internet docket.” USTelecom's Banks didn't link the two issues, saying forbearance decisions depend on details particular to each case. “But if forbearance decisions are going to depend on data from every conceivable market, that’s going to make [forbearance] very difficult,” he said.