Standard Practice

Posted: 1/2002

Standard Practice
FCC Aims to Raise Bar on Incumbents
Wholesale Provisioning Performance

By Kim Sunderland 

Another regulatory phase in the
endless saga of local telephone market competition is under way on the federal

Telecommunications regulators want
to set national rules for the incumbent local exchange carriers (ILECs) that
would bring them to regular standards of performance in their provisioning of
wholesale facilities and services to rival carriers.

The Federal Communications
Commission (FCC) took the first step in this process by adopting a plan to
create measurements and standards for evaluating an ILEC’s provisioning

"With the adoption of this
important notice, the commission begins a second phase in its implementation of
the local competition provisions of the Telecommunications Act of 1996,"
FCC Chairman Michael K. Powell said. "Our decision to seek comment on
whether to adopt national performance requirements evidences what I hope will be
some of the hallmarks of this more mature stage in our regulatory efforts."

The FCC seeks to accomplish three
goals: Create certainty in the marketplace by providing all carriers with bright
line guidance about whether an ILEC has provided interconnection, collocation
and access to unbundled network elements (UNEs) in a nondiscriminatory manner;
reduce reporting costs and minimize regulatory burdens by streamlining,
standardizing, and simplifying the potentially divergent federal and state
regulatory requirements; and establish specific enforcement policies or
guidelines, including self-effectuating remedies for responding to violations of
any national measurements and standards the commission adopts.

While those are high aspirations,
competitors see the FCC’s move as one of the most significant pro-competitive
actions it has taken in the last few years. This notice, they say, signals the
commission’s intent to move quickly to adopt a set of rules that, for instance,
could ensure facilities-based CLECs have timely access to local loops
provisioned by the ILECs.

Specifically, the FCC proposes
adopting concrete federal rules that would require ILECs to provide loops and
line-sharing UNEs to competitors in a short
and specific timeframe. Moreover, the incumbents would be subject to specific
monetary penalties for failure to meet such standards.

This new set of rules would provide
the commission’s enforcement bureau with stronger tools to punish ILEC
violations of the Telecom Act, according to representatives of Covad
Communications Co.

For instance, if a facilities-based
CLEC, such as Covad, did not receive a loop on time from an ILEC, Covad could be
entitled to monetary damages.

Covad assistant general counsel
Jason D. Oxman praised the FCC actions, saying "the real winners are the
consumers and small businesses who will experience an even quicker and easier
installation process with companies like Covad."

Powell predicted that setting out
clear expectations should enhance enforcement efforts.

"Such expectations tell
carriers what behavior satisfies the broad statutory requirements, and what
behavior falls short," Powell said. "This approach ensures carriers
will know ahead of time how to conduct themselves on matters most crucial to
meaningful competition."

However, in the chairman’s
interpretation of competition, the operative phrase to consider is
"facilities-based." Under the Telcom Act, competitors have three entry
modes into the local market: build their own facilities, lease UNEs from the
Bells to combine with their equipment, or resell Bell services.

With policy beginning to shift, big
local competitors such as AT&T Corp. and WorldCom Inc. that lease parts of
the ILECs’ networks fear losing that access as the FCC simultaneously pushes for
rivals to become facilities-based.

Powell says competitive carriers
ultimately should offer more of their own facilities, becoming less dependent on
the Bell networks.

"This notice," Powell
said, "acknowledges what has been apparent for some time: That
facilities-based competition is the mode of market entry most likely to foster
simultaneously and sustainably the [Telecom] Act’s mandates of competition,
deregulation and innovation."

With all due respect, sir, wake up
and smell the coffee, competitors say. If leasing of network elements is no
longer available as a local market entry strategy, then local competition will
be a pipe dream, they say.

Obviously, the FCC’s interpretation
of ‘local competition’ differs from that of many competitive carriers.

12-Step Strategy

The FCC proposes 12 specific metrics
to measure an ILEC’s ability to provide pre-ordering, ordering, provisioning,
repair and maintenance functions that competitors use to interconnect, collocate
or obtain access to UNEs (Click

The FCC also requested comment on
whether other measurements and standards would be more effective and less
burdensome. The Bells definitely support fewer regulations.

Lawrence E. Sarjeant, vice president
of regulatory affairs and general counsel for the Bells’ lobbyist the United
States Telecom Association (USTA) would like to see the industry agree on a
limited set of performance measures and standards that would be consistently
applied across the nation.

Sarjeant says the FCC must not add
more measures to an already lengthy list imposed upon the nation’s ILECs by the
states. This would "unnecessarily increase the regulatory burdens on ILECs,"
he said.

Conversely, "national measures
are long overdue," says H. Russell Frisby Jr., president of the Competitive
Telecommunications Association (CompTel.)

"The commission is fortunate,
because it can build upon the foundation laid by the state commissions,"
Frisby says. "Indeed, state innovation in this realm is the sole reason
that we are talking about national performance measures today."

Even Powell agrees with CompTel’s
analysis and says the FCC has been "girded primarily, sometimes solely,
by the wisdom of forward-thinking state commissions."

New York regulators, for instance,
have had in place such ILEC quality and performance metrics for a long time,
explains Thomas J. Dunleavy, a commissioner with the New York Public Service
Commission (NYPSC).

Currently, the NYPSC is considering
revisions to its inter-carrier service quality guidelines for Verizon
Communications. As part of its goal, the NYPSC assigned a Carrier Working Group
to monitor performance standards and measurements and recommend modifications to
the commission.

The working group, in turn, formed a
subgroup to review the best measures of current operational processes and to
streamline the performance and reporting requirements for all carriers. Carriers
are to begin reporting Verizon’s performance on the metrics beginning this

The NYPSC also directed Verizon to
retain one year of raw data for ordering and provisioning should the
commission’s staff require any special studies. However, Dunleavy says the PSC
handles these "incentive plans" on a company-by-company basis.

Such a patchwork of inter- and
intra-state regulations is problematic, according to FCC Commissioner Michael J.
Copps. Instead, he supports uniform national standards because they have the
potential to promote regulatory efficiency, allow benchmarking and comparisons
among carriers operating in different states, and reduce the administrative
burdens of myriad different requirements.

"We must work closely with our
state colleagues," Copps added. "Many states have already established
performance metrics and penalties. We should draw on their experience and work
cooperatively to implement measurements that will provide the information we
need and the state commissions need to carry out our statutory

New York’s Dunleavy says the FCC and
the state regulators are developing a closer relationship these days. "It’s
getting better," he says. "The FCC is realizing that we can do
together a better job than we could do alone."

Too bad the incumbents don’t feel
that way about leasing out parts of their networks, competitors say, because
customers would be the ultimate victors.

The FCC could have national ILEC
performance guidelines in place by mid-year.

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