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Soap Box: Policy Challenges Persist in 2008

2008 has been a year of policy challenges for competitive communications providers. COMPTEL and its members continue the fight to preserve their ability to obtain the wholesale inputs they need to provide high-quality, innovative services and expand their networks in an effort to ensure that consumers have a choice of carriers and services.

Ever since the Telecommunications Act of 1996 was signed into law, the incumbent local exchange carriers have challenged their obligations under the Act, which has had the impact of suppressing or delaying the development of competition. As the incumbent carriers continue to grow ever larger through mergers of both wireline and wireless operations, they press for more and more deregulation in both the regulatory and legislative arenas. Monitoring and fighting these deregulatory efforts have presented constant challenges for competitors and consumer advocates.

Forbearance Process Reform

One of the current challenges has been created by Section 10 of the Act, which provides for a process called “forbearance.” Section 10 was intended to allow companies under the regulation of the FCC to file a petition to eliminate outdated regulatory obligations, which were no longer needed and did not adversely affect the “public interest.” It requires the FCC to act within 12 months of the date that a petition is filed, with the option to extend the deadline by three months. If the commission fails to act, the petition is “deemed granted.” The 12- or 15-month timeline was designed to create a mandatory “shot clock” on the FCC, which on many occasions has failed to act in a timely manner. Although we share this concern about the FCC’s failure to act on many critical issues, no one envisioned the impact Section 10 would have, as happened in March 2006 when a petition Verizon filed for forbearance from regulations concerning its broadband facilities was “deemed granted” in a 2-2 tie vote. In addition, no order was released so the decision could not be challenged in court.

Incumbent carriers, as a matter of course, use the forbearance process, rather than rulemakings, to free themselves from statutory and regulatory obligations. COMPTEL and its members have brought this broken forbearance process to the attention of Congress and urged the enactment of reform. In July, Congressman Ed Markey (D-MA) held an oversight hearing on the problems with the forbearance process. Congressman John Dingell (D-MI) and Senator Daniel Inouye (D-HI) have introduced legislation that would eliminate the “deemed granted” language from Section 10 of the Act. While COMPTEL wholeheartedly supports these efforts, additional reform is needed to prevent regulated entities from rewriting, or effectively repealing, the Act without Congressional oversight.

Copper Retirement

Another critical issue facing competitors is the ILECs’ retirement of copper facilities, which threatens access to customers. Competitors and their suppliers, through innovation, ingenuity and response to market demand, have found ways to expand the use of copper and enhance its ability to deliver broadband voice, data and video services. However, as ILECs install fiber to the premises, they are moving to restrict the ability of customers to choose an alternative provider in the future by removing the existing fiber facilities that competitive carriers depend upon to deliver service.

ILEC copper facilities reach virtually all U.S. households and commercial buildings. Most of this copper network was originally installed under rate-of-return regulation and paid for by the ratepayers. If the U.S. continues to allow its incumbent carriers to move away from providing competitors access to last mile legacy facilities, it risks falling farther behind in the world rankings of broadband adoption.

Intercarrier Compensation and Other Policy Issues

Money is “king” in this and every other industry for capital to both invest and to operate on a daily basis. The underlying costs paid by any provider to provide its products to the customer plus some margin determine what rates the consumer pays. Therefore, compensation issues, such as intercarrier compensation for access charges and local reciprocal compensation, universal service, “special access” and unbundled loop rates, to name a few, are critical to competitors as revenue and cost factors to their operations.

The list of other policy issues COMPTEL is involved in cover a range that include the authorization to use white space for wireless broadband applications, managed packet network interconnection for IP-to-IP traffic, AT&T’s compliance with its merger conditions, pole attachment fees and network management issues.

The 2008 landscape will soon change based on the outcome of the presidential election. COMPTEL and its members look forward to working with consumers, other stakeholders and policymakers in resolving these issues with the goal to maintain and promote competition, innovation and the growth of our industry and the economy.

Jerry James is the CEO of COMPTEL, a Washington, D.C.-based trade association representing competitive facilities-based telecommunications service providers, emerging VoIP providers, integrated communications companies and their supplier partners. The COMPTEL PLUS Convention + Expo will be held Oct. 5-8 at the Orlando Marriott World Center Resort in Orlando, Fla.

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