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Academics, Researchers Say UNE-P Prolonging Telecom Crisis

Four telecom experts said Tuesday local telephone regulations have stymied innovation, discouraged investment, created an artificial competitive model and “prolonged” an unprecedented meltdown in a sector that Wall Street now shuns.


In a report the New Millennium Research Council issued today, five academics and researchers called on the FCC to scrap many of the unbundled network element – platform (UNE-P) rules that allow AT&T Corp., MCI and smaller companies to resell local phone service over the Bell networks at rates state regulators set based on a forward-looking cost model. Some experts also supported the elimination of line-sharing requirements tailored for broadband providers.


The FCC is scheduled to issue new rules by Feb. 20.


Matthew Bennett, policy director of the Alliance for Public Technology, said today the unbundling requirements have not furthered the goals of competition set forth in the Telecommunications Act of 1996.


“We feel [the] unbundling regime has not contributed to any of these goals,” he said.


John Malone, president and CEO of the Eastern Management Group, said the resale platform has “kept telecom investors sidelined.”


He also said it is more feasible today to invest in switches because the cost of network gear has dropped so substantially.


“People can afford to buy these facilities when they get access to money,” he said.


As part of its highly anticipated Triennial Review, the FCC is charged with determining under which circumstances companies competing with the incumbent carriers would be “impaired” to otherwise offer the same service without access to the unbundled network elements (UNEs).


In Section 251 of the 1996 Telecom Act, Congress established unbundling and resale obligations requiring incumbent phone providers to lease pieces of their network to rivals.


But Malone said the FCC created UNE-P. “Congress did not invent UNE-P,” he said. “UNE-P is a concoction of the FCC’s own making.”


Randolph May, senior fellow and director of communications policy studies at the Progress & Freedom Foundation, said the U.S. Supreme Court and D.C. Circuit Court of Appeals found that the FCC’s UNE rules were “too expansive” and “not consistent with the Congressional intent.”


The long-standing debate over what constitutes impairment has never been resolved. The FCC is expected to decide on this key issue within the next three weeks, though it is uncertain what role the federal agency will give state regulators in determining the level of impairment in specific markets.


The report issued today, entitled “What’s at Stake at the FCC on UNEs: Ensuring Sustainable Competition,” features papers from Bennett; Malone; May; Stephen B. Pociask, president of TeleNomic Research LLC; and Solveig Singleton, senior policy analyst at the Competitive Enterprise Institute.


The report is available at www.newmillenniumresearch.org.





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