FCC REPORTEDLY WORKING ON UNE COMPROMISE

FCC is moving toward compromise on contentious UNE proceeding, although people in and out of Commission said everything still was quite uncertain. Industry sources said they thought agency now was looking at draft proposal that FCC Comr. Martin, considered swing vote, and others might be able to accept. However, one 8th floor aide said his office hadn’t seen anything on paper yet.

Sources said agency probably would adopt some variation of NARUC’s proposal outlining state and federal responsibilities over UNE review. One lobbyist expressed “cautious optimism” that FCC was moving toward NARUC plan. Another observer said: “I hear the basic framework is the NARUC plan” with debate now centered on “what restrictions the FCC gives the states.”

On other issues, line sharing is expected to remain open to competitors such as Covad although there could be phase- out in future. Agency might set limit on what new broadband facilities had to be unbundled, sources said. For example, FCC reportedly is considering basing unbundling requirement on capacity of broadband lines, perhaps requiring unbundling of lower capacity facilities under 1.5 Mbps. There’s talk that Commission could position that as trade off for Bells -- slower phase-out of UNE-platform (UNE-P) but some relief from unbundling requirements for broadband facilities.

ALTS filed ex parte letter Thurs. outlining several issues that troubled its facilities-based members. ALTS Gen. Counsel Jonathan Askin said members felt they were caught in middle. Although as facilities-based competitors they represent goal of Telecom Act and FCC, they fear their needs are being overshadowed by debate over UNE-P rules and state authority, he said. Letter urged FCC not to forget ALTS concerns about facilities-based carriers’ access to transmission facilities such as loops, transport and enhanced extended links (EELs) that they used to complete their service.

Those network elements “are most fundamental to the growth of facilities-based competition,” letter said. “CLECs will have no incentive to purchase and install their own switches unless they can lease these transmission facilities to connect their switches and other equipment to the customer.” Among ALTS’ pleas: (1) FCC should simplify provisioning process. “The FCC now has the opportunity to fix the remaining loopholes that have allowed ILECs to deny CLECs fair access.” (2) Commission should “put an end to ILEC use of comingling restrictions which have made the EEL rules virtually meaningless for many CLECs.” (3) FCC should apply impairment analysis for transport on route-by-route basis. ALTS said “proxy tests that consider broadly how much alternative transport is available over a broader geographic area or how many carriers are colocated in ILEC end offices cannot demonstrate whether the requesting carrier is impaired without unbundled access to ILEC transport on a particular route.”

(4) FCC “appears to be considering a plan to exempt some fiber-fed facilities from the unbundling rules” even though it could impede CLEC service to customers. Even though ALTS members could provide service to most of their customers at speeds below 1.5 Mbps, any cap could be outdated soon as technology moved on. “Accordingly, ALTS urges the Commission to proceed with the utmost of caution, should the Commission feel compelled to respond to incumbent LEC requests to develop a bandwidth cap for residential services.”

Although several state regulators had lined up behind NARUC plan, 2 state commissioners submitted letter to FCC Thurs. taking somewhat different stance. Colo. PUC Chmn. Gregory Supkin and Fla. PSC Comr. Charles Davidson said they were “in support of [FCC] Chairman Powell’s effort to change the circumstances under which [ILECs] must unbundle parts of their networks.” Letter said “under the existing regime… there is little incentive for either ILECs or… CLECs to invest in new state-of-the-art facilities.”

Letter recommended that: (1) “Mandated unbundling of a particular incumbent’s network element should not be required… where the element… could be competitively supplied… in the market.” (2) There should be reasonable transition period for CLECs to move from UNE-P to CLEC-owned switches if FCC removed unbundling from national list. (3) “We firmly believe that whether to add or remove an element to the national list is a federal question.” However, states can play role in helping FCC develop transition policy, take lead in setting competitive resale prices, continue to address “economic or operational barriers to competition” and have oversight of hot-cut performance of ILECs on state- specific basis.

Among many other letters sent to FCC before “sunshine” restrictions kicked in Thurs. night was one from CapNet, high-tech PAC that said it was “troubled that the mantra of ‘increasing investment’ has become one of the main arguments in favor of relieving incumbents… of regulatory obligations.” CapNet said it “found no evidence that proves the Bell companies would significantly increase their spending if they were granted the type of regulatory relief that the Commission is now considering.”

Citizens Against Govt. Waste (CAGW) said House Commerce Committee Chmn. Tauzin (R-La.) was “improperly meddling” in FCC rulemaking process on UNE Triennial Review by meeting with FCC Commissioners. “While Chairman Tauzin may not be troubled by pressuring independent government agencies to bend to his will, the American taxpayers should be disturbed. How many times must the taxpayers foot the bill when an agency is forced to do the political thing instead of the right thing?” asked CAGW Pres. Tom Schatz. CAGW cited statements by Senate Commerce Committee Chmn. McCain (R- Ariz.) that questioned Tauzin’s meeting with officials. “As chairman of the FCC’s authorizing committee, he has not only a right but an obligation to weigh in at the FCC,” Tauzin spokesman Ken Johnson said. Johnson said Tauzin wasn’t going to apologize for advocating action that he said would create more jobs in telecom industry. He also said McCain and Tauzin had spoken and that things between them were “just fine.”

“I think the search for the 3rd vote has been replaced by the search for the 3rd way,” analyst said. Agency apparently is hoping to walk out with 5-0 vote in agenda meeting Thurs., many observers said. Lobbyist said he thought agency had “moved from political disputes to more constructive efforts to seek compromise.”

One FCC staffer said predictions of week-end snow storm were causing concern on 8th floor because 3-day snow accumulation could keep commissioners and aides from coming to office. Much of time may be spent on telephone, aide said.

Meanwhile, House Judiciary Committee Chmn. Sensenbrenner (R-Wis.) wrote Feb. 6 to Justice Dept. Antitrust Div. asking how UNE Triennial Review might “produce regulations which will have a deleterious impact on competition and consumer choice in the voice and data telecommunications markets.” He said virtually all of DoJ’s approvals of Sec. 271 applications were contingent on competitors’ reaching customers through UNE-P. Sensenbrenner said if FCC prevented competitors from using UNE-P, “the predicate for long distance competition upon which the Antitrust Division and the FCC relied when granting numerous Bell 271 applications would cease to exist. This development might undermine the robust DoJ role enshrined in Sec. 271, while altering the fundamental policy compromise which underlies the 1996 Act.”

Sensenbrenner asked series of questions, including: (1) To what extent has DoJ Antitrust Div. lent its antitrust expertise to pending proceedings? (2) Has Antitrust Div. been contacted by FCC to assess potentially anticompetitive aspects of proposed rules? (3) Should DoJ have more formal role in Triennial Review process? (4) How will pending rules affect DoJ’s role in providing approval for Bell long distance service? (5) Should state role be maintained? (6) Will substantial revisions of UNE-P rules fundamentally alter market-based assumptions on which Sec. 271 applications granted? (7) Will DoJ reassess existing Sec. 271 approvals if UNE-P is eliminated?