Industry Agreement Could Solve Unbundling Morass
September 10, 2020 | by Andrew Regitsky
In November of 2019, the FCC released a Notice of Proposed Rulemaking (NPRM) in Docket 19-308, in which it intends to eliminate all ILEC unbundling requirements except in the most rural areas of the country. Specifically, the NPRM would eliminate:
DS1 and DS3 loops in counties and study areas deemed competitive in the Business Data Services (BDS) Order and the Rate-of-Return BDS Order, with an exemption for DS1 loops used to provide residential broadband service and telecommunications service in rural areas. A county is deemed competitive if 50 percent of the locations with demand for business data services in that county are within a half mile of a location served by a competitive provider or 75 percent of the census blocks in that county have a cable provider present. The competitive market test will be performed every three years to assure that each county is appropriately designated as competitive or non-competitive;
DS0 loops in urban census blocks;
Narrowband voice-grade loops; including UNE Analog Loops, 64 kbps voice-grade channels over last-mile fiber loops when an ILEC retires copper, and the TDM capabilities of hybrid loops;
Dark fiber transport in wire centers within a half-mile of alternative fiber;
Network Interface Devices (NIDs); and
Stand-alone Operating Support Systems (OSS).
The proposal was immediately attacked by CLECs, claiming that ILEC unbundled network elements (UNEs) are still needed in much of the country since the economies of scale do not exist to build out their networks to serve their relatively small business customers.
The battle between ILECs and CLECs has raged since UNEs were introduced in the 1996 Telecom Act. Initially, ILECs were required to provide UNEs to their customers in almost all circumstances at low incremental cost levels. These requirements were chipped away over the years by courts and the Commission. The current Commission is especially negative toward forced unbundling and believes CLEC concerns could be handled by purchasing ILEC wholesale services at market-based prices.
With the current NPRM likely to end up delayed by new court appeals, it is noteworthy that almost the entire industry recently came together to agree on a compromise solution that would spare some UNEs and allow a long transition for the elimination of others. The agreement was revealed in an August 5, 2020 letter to the FCC from USTelecom and Incompas. The agreement calls for the following:
Requesting carriers are impaired without unbundled access to DS0 loops in non-urban census blocks and census blocks in Urban Clusters with no changes to the rules governing access to or pricing of those UNE DS0 loops. In census blocks in Urbanized Areas, requesting carriers are not impaired without such access.
In census blocks in Urbanized Areas, to sustain the non-impairment and forbearance conclusions, requesting carriers will be allowed to continue to utilize unbundled DS0 loops that they were leasing as of the Order’s effective date for up to 48 months following that date.
Requesting carriers will be allowed to lease new unbundled DS0 loops in those Urbanized Area census blocks for 24 months following the Order’s effective date.
Incumbent LECs will not be entitled to raise rates on unbundled DS0 loops in Urbanized Areas—including for those unbundled DS0 loops ordered during the two-year new ordering period—for 36 months following the Order’s effective date.
Incumbent LECs will be entitled to raise such rates by up to 25 percent in months 37-48, and to charge market-based rates after month 48, including for those unbundled DS0 loops ordered during the two-year new ordering period.
Where suitable facilities exist, incumbent LECs will make commercial alternatives available to requesting carriers in any area in which unbundled DS0 loops are no longer available.
Requesting carriers in both urban and rural areas are impaired without unbundled access to DS1 loops in (and only in) counties deemed noncompetitive pursuant to the competitive market test (“CMT”) developed in the BDS Order, with no change in the rules governing access to or pricing of those UNE DS1 loops.
In counties deemed competitive under the CMT, to sustain the non-impairment and forbearance conclusions, requesting carriers will be allowed to continue to utilize unbundled DS1 loops that they were leasing as of the Order’s effective date for up to 42 months following that effective date. During that period, the incumbent LEC will not increase rates for access to the unbundled DS1 loop.
In those “competitive” counties, requesting carriers will be entitled to order new unbundled DS1 loops for the first 24 months following the Order’s effective date and retain those loops up to 42 months after that effective date. However, carriers will not be entitled to convert special access circuits to UNEs under any circumstances at any point following the date on which the Order is adopted.
Requesting carriers are impaired without unbundled access to DS3 loops in (and only in) counties deemed non-competitive pursuant to the CMT, with no change in the rules governing access to or pricing of those UNE DS3 loops.
In counties deemed competitive under the CMT, requesting carriers will be allowed to continue to utilize unbundled DS3 loops that they were leasing as of the Order’s effective date for up to 36 months following that date. During that period, the incumbent LEC will not increase rates for access to the unbundled DS3 loop.
Requesting carriers will not be entitled to order new unbundled DS3 loops in those counties as of the effective date of the Order. Also, carriers will not be entitled to convert special access circuits to UNEs under any circumstances at any point following the date on which the Order is adopted.
Requesting carriers are impaired without unbundled access to OSS for purposes of local interconnection and local number portability where the incumbent LEC maintains such databases.
Requesting carriers are not impaired without access to unbundled OSS used in connection with a given network element where, and to the extent conditioned above, the Commission has found that requesting carriers are not impaired without unbundled access to that network element in the geographic market at issue (i.e., “standalone” OSS unbundling) and/or the Commission has exercised its Section 10 authority to forbear from unbundling obligations for that network element in that market.
As a further condition of its findings of non-impairment and/or forbearance with respect to DS0, DS1 and DS3 loops, where commercial alternatives are available, an incumbent LEC will provide commercial access to its OSS systems to requesting carriers in any area in which unbundled OSS functionality is no longer available.
USTelecom and Incompas request the Commission to accept their proposal as quickly as possible.
The Compromise Proposal would bring finality and certainty to issues that have long bedeviled parties and policymakers alike. It would do so in a manner that accounts for the interests of parties that have been adverse to one another over many years. It would be lawful, and amenable to implementation without further comment. In presenting this proposal, we urge the Commission to adopt this proposal without modification. The parties to the negotiations all have made concessions to bring this overall effort to fruition, and the overall proposal represents a delicate balancing of interests that we urge the Commission not to disturb. The Joint Parties therefore respectfully ask that the Commission adopt the proposed outcomes, ending long simmering disputes and allowing network providers of all types to focus on what they do best: Providing cutting-edge services to the American people (Industry August 5, 2020 letter, at p. 9.).
A Commission order is expected this year.