Competitors Urge More FCC Oversight of Top Carriers’ Unbundling Prices

The coalition said better FCC enforcement of competitors’ Section 271 rights to unbundled loops, transport and switching facilities would spur broadband offerings by competitive companies. Section 251 unbundling rules provide competitors another way to connect to incumbent networks, but the coalition said CLECs are losing that avenue through incumbents’ forbearance petitions and application of non- impairment triggers. For carriers like Sprint Nextel that can’t use Section 251 because it doesn’t cover wireless or long-distance-only services, Section 271 is already the only option, it said.

Federal courts have ruled that only the FCC may enforce Section 271, but the commission has refused to act despite “repeated requests” by competitors, Genevieve Morelli, a CLEC attorney from Kelley Drye & Warren, said on a call with reporters Monday afternoon. Qwest, AT&T and Verizon “have taken advantage of this vacuum” and are “essentially ignoring” Section 271, she said.

But USTelecom said new rules would discourage broadband investment by incumbents. “Given that the FCC and state commissions have put in place extremely detailed requirements about compliance through hundreds of thousands of pages of orders, it’s hard to believe that any additional regulation could be required,” said Senior Vice President Jonathan Banks. “Consumers, the FCC and the communications industry’s efforts to invest in building the broadband networks of the future and creating the jobs that go with it would all best be served by looking forward and not re-fighting what are now long irrelevant battles.”

The FCC probably will put the petition out for comment, since that’s the commission’s “typical practice,” said an industry attorney. But that wouldn’t mean the commission will agree with the CLECs, since the petition seems to deal with services that the FCC has decided in unbundling decisions since 1996 are competitive enough, the attorney said. Section 271 services are made available through tariffs and negotiated contracts, and competitors can file formal complaints if they disagree with the price charged, the source said.

In the petition, competitors urged the FCC to sharpen the teeth of Section 271 rules requiring just, reasonable and nondiscriminatory pricing. Competitors called for a “safe harbor” limiting what incumbents charge for Section 271 services. They suggested a price cap based on the actual cost of the service plus a 22-percent markup to cover overhead. A proposed nondiscrimination rule should be based on similar rules in Section 251, but without any of the use or user restrictions in that provision, they said. In addition, competitors urged the FCC to require the three incumbents to file “statements of generally available terms” showing Section 271 rates and terms provided to competitors. The statements would have to stay in effect three years.

Competitors believe that the commission under Chairman Julius Genachowski will take a “fresh look” at unbundling and how it ties in with broadband deployment - especially considering a recent Harvard University study that the FCC commissioned that found open-access rules promoted broadband development in other countries, Morelli said. CLEC consultant Joseph Gillan said the petition is prime for review by an FCC striving to be fact-driven. “The petition presents them with a fact-based problem that needs resolution,” he said.

Although petitioning for an “expedited rulemaking,” Morelli said she doesn’t expect FCC action before February, when the commission’s National Broadband Plan is due. But it wouldn’t be a “huge stretch” for the national plan to take up unbundling, she said. The CLEC filing followed a panel on the subject at last month’s CompTel trade show (CD Oct 14 p7). The matter had long been brewing in competitor regulatory circles, but the CompTel panel “helped crystallize our thinking so we could put together a petition,” Morelli said.