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CompTel/ASCENT released a study in late June claiming the demise of the federal rules could cost small and medium-sized businesses about $4.9 billion annually if the FCC does not preserve affordable wholesale access to parts of the biggest local phone networks. Without access to DS1 loops and transport at current UNE rates, telecommunications providers will have to buy "special access" services from BellSouth Corp., Qwest Communications International Inc., SBC Communications Inc. and Verizon Communications Inc. at substantially higher rates, according to a study by Washington D.C.-based Microeconomic Consulting & Research Associates Inc. This could force competitors to raise the prices they charge businesses and exit markets, according to the study.
"The gross annual cost impact to CLECs of a transition from DS1 loops and transport to equivalent special access services is $2 billion," according to the study. "This represents more than a 100 [percent] cost increase on average to the CLECs. In some states, these costs increase up to tenfold."
Carriers provide approximately 467,000 DS1 lines to businesses, according to a CompTel/ASCENT and NuVox Communications Inc. press release announcing the MiCRA study. A DS1 can support 24 voice-grade channels, or a combination of voice and data connections at a transmission rate of 1.544mbps.
On March 2, the U.S. Court of Appeals for the District of Columbia Circuit overturned the FCC's national finding that competitors are impaired without access to transport at the current UNE rates. Transport is used to link a network from one Bell central office to another. The court said the FCC needs to consider special access as a substitute, says Jake Jennings, vice president of regulatory and industry affairs with NuVox. NuVox does not dispute that the court overturned the FCC's national impairment finding concerning transport.
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However, CLECs and the Bells argue over how the court order affects the price of high-capacity loops. Jennings says it is the competitors' position that the court did not overturn the FCC's national finding that CLECs are impaired without access to high-capacity loops at UNE rates. Instead, it rejected the rule which gave states discretion to remove loops as a UNE, Jennings says.
SBC strongly disagrees. "In SBCs view, [the March court decision] unquestionably vacated the FCC's high-cap loop rules," Pacholczyk says, citing the court order. For example, 'in vacating the FCC's 'transport' rules, it defined the term 'transport' to include 'transmission facilities dedicated to a single customer.' That is what the commission defines as a 'loop.'" The FCC is likely to settle the debate when it releases interim rules. FCC spokeswoman Diane Griffin says she could not provide any details about the rules before their official release.
Meantime, Qwest spokesman Skip Thurman also says the court vacated the rules requiring the Bells to provide high-capacity loops at UNE rates. "Qwest has initiated change of law processes, in accordance with the terms of its interconnection agreements, to conform those agreements with the court decision," he says. "Until our interconnection agreements have been so modified, Qwest will continue to honor their terms and conditions." BellSouth says a transition plan was proposed to transfer wholesale customers from UNE highcapacity dedicated transport, loops, and dark fiber, to BellSouth tariffed and regulated offerings or to other alternative facilities.
Verizon spokesman Larry Plumb says CLECs have been successfully serving businesses using special access for years. "In my view, CompTel's concern isn't about the ability of its members to compete. Not if you look at their success to date in the marketplace. Its about the size of their margins," Plumb says. "Sure they'd like service at a cheaper price. Wouldn't we all? But there's no policy need and no legal justification for hi-cap, UNE loops at cheap TELRIC prices."
