FCC adopts new network-sharing rules

The Federal Communications Commission on Wednesday adopted new rules about what parts of incumbent telephone carrier networks must be shared with competitors, backtracking on an earlier decision forcing incumbents to share local switching facilities in the residential market.

The Federal Communications Commission on Wednesday adopted new rules about what parts of incumbent telephone carrier networks must be shared with competitors, backtracking on an earlier decision forcing incumbents to share local switching facilities in the residential market.

The new rules, an attempt to respond to a March decision by the U.S. Court of Appeals for the D.C. Circuit that overturned parts of the FCC's Unbundled Network Element (UNE) rules, was criticized by AT&T. AT&T, which competes with the incumbents in some residential markets, said the decision to no longer require the incumbent carriers to share mass-market switching facilities at discounted rates "fails to secure access to monopoly facilities essential to competition."

"Today’s order clearly eliminates the most significant, and sometimes only, competitive alternative for American residential customers," said Len Cali, AT&T vice president of law and director of federal government affairs, in a statement.

AT&T also objected to the FCC's decision to limit the sharing of some high-capacity DS-1 and DS-3 network loops in the business market. AT&T estimated the new order would limit competitors' access to 6.7 million U.S. business lines.

Wednesday's order, on a 3-2 FCC vote, revises the FCC's February 2003 triennial review decision on where competitors of large incumbent telephone carriers -- the regional Bells -- are significantly impaired. Competitive local exchange carriers, or CLECs, have access to fewer pieces of the Bells' networks with Wednesday's decision. The appeals court decision overturning the triennial review order was the third time since 1996 that the FCC telecom rules were rejected by a court.

The UNE rules were designed to foster competition and force the four large regional Bells to share parts of their networks they inherited after the government-forced breakup of the original AT&T monopoly in the early 1980s. Wednesday's decision allows the UNE rules to continue where competitors have "no other viable way to compete," and it complies with the appeals court ruling, said FCC Chairman Michael Powell, who opposed much of the original triennial review order.

Wednesday's action will drive CLECs to invest in their own facilities, Powell said. "This item decidedly does not attempt to make all sides happy," Powell added. "Consequently, one will undoubtedly hear the tortured hand-wringing by incumbents that they are wrongly being forced to subsidize their competitors. Conversely, one can expect to hear dire predictions of competition’s demise from those who wanted more from this item. Time will show this will not be so."

Incumbents BellSouth, Verizon and SBC praised the FCC's switching decision, but objected to its decision on DS-1 and DS-3 loops.

"The commission apparently failed to meet other court guidelines or acknowledge the existence of competition in the business sector," Susanne A. Guyer, Verizon's senior vice president of regulatory affairs, said in a statement. "The FCC seems determined to prolong a few corporations’ addiction to subsidy, a decision that will harm consumers by undermining facilities-based competition."

The FCC transport decision "ignores clear direction" from the appeals court, James C. Smith, senior vice president-FCC at SBC, said in a statement.

Commissioner Michael Copps said Wednesday's decision will force many CLECs to abandon the residential market. "What we have in front of us effectively dismantles wireline competition," he said. "Brick-by-brick, this process has been under way for some time. But today’s order accomplishes the same feat with all the grace and finality of a wrecking ball. No amount of rhetoric about judicially sustainable rules and economically efficient competitors can hide the bang-up job this Commission has done on competition."

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