Enough whining on unbundling; we need to work with this decision and all its imperfections. If Powell doesn’t like it, he can quit. If the RBOCs don’t want to invest, let’s bite the bullet and break them up.
Last month the FCC issued its ruling on unbundled network elements. I’ve been an FCC watcher for decades, and I never heard as much whining after an order as this. It’s not uncommon for one group of carriers or another to be disgruntled after an FCC ruling; after all, these guys are paying good money to lobbyists to promote their causes. But this time, we had whining from both sides of the debate on UNE policy, and FCC Chairman Michael Powell was the biggest whiner. There’s been so much whining to the media that it’s hard to sort out what happened.
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The regional Bell operating companies won it all with broadband: Line sharing has been eliminated, fiber remotes will be protected from unbundling, and – big surprise – fiber to the home also will be protected. That disappointed the interexchange carriers (IXC), with WorldCom claiming that not having access to Bell fiber relegates it to “an inferior method of broadband delivery.”
Where the RBOCs lost was in the UNE-platform area, where they’d hoped (unrealistically) that the FCC would eliminate their unbundling requirements for voice services. All the RBOCs stood up and threatened to stop modernizing their networks if the decision wasn’t reversed. Their whining sent network equipment stocks into a spin and battered Wall Street’s confidence (yet again) in a telecom recovery.
But if the RBOCs and IXCs are whining, Powell is crying us a river. The majority of the FCC, he said, has “contorted the letter and spirit of the statute,” made “vague and solicitous pronouncements,” “delegated its own responsibilities” and committed “reversible error.” Gosh, that sounds serious. It’s certainly inconsistent with Powell’s other whine: that the majority elected to end line sharing. How can you be for eliminating UNEs and against eliminating line sharing, which is a UNE? Must be a Washington thing.
All this whining is premature. The whole debate on UNE policy hinges on a simple issue: Will the FCC, in the published order, provide substantive guidelines for determining whether the lack of a given unbundled element will cause “impairment” in the language of the Telecommunications Act of 1996? If it provides those guidelines, there’s every reason to believe that the courts would uphold them, and that the states’ role in setting unbundling policy would be reduced. Suppose the FCC gave precise formulas on how much competitive access, or switching, had to be available in a given area so to free the incumbent local exchange carrier from unbundling there? Would that create chaos and anarchy, just because the states then filled in the blanks on the formula? The FCC easily could publish guidelines on UNE policy that would have the effect of removing switching in all the major metropolitan areas.
It’s also premature to assume the RBOCs would carry out their threat to stop investing in the network. If you look at the wording of their comments, they’re saying they won’t “increase spending.” Humbug! They were never going to do that anyway. The legacy part of the network was doomed to low ROI by falling voice prices, so that part was going to stagnate. It’s always been about broadband, which the RBOCs need to promote to revalidate their last-mile technology, the only thing that gives them a barrier against major competitive market entry, unbundling or not.
In our post-bubble, war-on-the-horizon world, all companies want the government to guarantee they’ll be a winner. So they pay lobbyists to push their viewpoints to regulators whether those viewpoints are good public policy or not, and if that doesn’t work, they whine about how badly they’re treated. Enough whining; we need to work with this decision and all its imperfections. If Powell doesn’t like it, he can quit. If the RBOCs don’t want to invest, let’s bite the bullet and break them up. I’ve never favored that strategy, but if the RBOCs are trying to hold broadband hostage to gain repeal of the telecom act, it’s time to forget the carrot and get out the stick. WorldCom? I guess they always can go Chapter 11 again, if they survive their current filing.
So stop whining, everyone, and let’s get to work!
