Wheeler, CLECs Prevail in Round 1 of FCC’s IP Transition Ruling

Ellen MuraskinThe FCC handed competitive local exchange carriers a victory on Thursday, voting in favor of Chairman Tom Wheeler’s July 10 proposals for price and service regulation during and after incumbent carriers’ transition from copper and TDM to fiber and IP-based local loop and transport services.

The vote followed party lines, with Chairman Wheeler and Commissioners Clyburn, and Rosenworcel in favor, and Republican commissioners Pai and O’Rielly against.

The adopted order requires providers to give consumers at least three months’ notice of plans to retire copper networks, and businesses at least six. But more to the heart of the ILEC objections, Thursday’s ruling requires “that replacement services be offered to competitive providers at rates, terms and conditions that are reasonably comparable to those of the legacy services.”

And while incumbents are not obligated to get Commission approval before retiring their copper networks, that comes with a big proviso: “as long as no service is discontinued, reduced, or impaired.” Stop, reduce, or impair a service, and Section 214 of the Communications Act – referenced in the ruling – kicks in, requiring FCC approval.

It’s that remaining piece of the Telecom Act, says Sam Kline, SVP of CLEC Granite Telecommunications, that’s responsible for the “voluntary” last-mile access the ILECs have been extending to competing carriers ever since the mandate to do so was technically rescinded in 2002.

“Section 214 created a regulatory backstop,” he explained to Channel Partners. “We have never had to go to the FCC [to enforce it]. We’ve always negotiated reasonable contracts. But everyone knew that that backstop was there. It allowed that wholesale business to exist.”

Decisions could yet change or be refined. The FCC’s announcement states that this is an interim measure, pending the completion of the FCC’s special-access proceeding, which is examining these issues more broadly. ILECs are sure to press their case with figures to show higher costs for the build-out of fiber, and punitive expense in maintaining copper lines at the same time.

The ruling does, in fact, acknowledge the need to clarify “criteria used to evaluate and compare replacement and legacy services,” perhaps leaving a window open to consideration of higher wholesale prices. The Commission also seeks comment on a range of needs that could be affected by IP transition, including 911 support, network capacity and reliability, access for …

… people with disabilities, network security, and complete coverage in a service area.

In an appreciative statement issued immediately after the vote, COMPTEL CEO Chip Pickering described the vote as supporting innovation as well as competition.

IP-based technology, which can be delivered over copper or fiber, was the result of innovations by competitive broadband providers seeking to disrupt the 100-year-old telephone network. Competition is a proven, free-market force that drives prices down and investment up. A return to rates regulated by monopoly rents and consolidated market power would be bad for consumers, business and investment.”

Pickering went on to list consumer, retail, small-business and municipal coalitions that had petitioned the FCC in favor of preserving competition.

Representing disappointed incumbent carriers, the Internet Innovation Alliance (IIA) issued its own statement, saying that “The FCC today missed a unique opportunity to accelerate the nation’s transition toward an IP future.”

Claiming that less than 5 percent of Americans currently rely exclusively on traditional, copper-line POTS, “the agency’s action translates into burdensome rules that create greater obstacles to retiring antiquated, 20th century copper-based telephone equipment. By impeding the retirement of outdated technology, the FCC’s requirements will divert resources necessary to invest in the upgrade toward new, next-generation, high-speed broadband Internet networks.”  

COMPTEL’s statement also acknowledged the next step in what’s sure to be a long, contentious process: “For the broadband marketplace to achieve the same level of competition in other markets, such as wireless and over-the-top, completion of the long-delayed special access proceeding must be the next step forward for the competition agenda.”

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