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Areas of controversy

Areas of controversy. Unbundled access issues How far do ILECs have to go in providing UNEs? Pricing issues What can the ILECs charge their competitors for use of UNEs and for reselling their services? Collocation

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Areas of controversy

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  1. Areas of controversy • Unbundled access issues • How far do ILECs have to go in providing UNEs? • Pricing issues • What can the ILECs charge their competitors for use of UNEs and for reselling their services? • Collocation • How much do the ILECs have to accommodate their competitors in providing them room for their (CLEC’s) equipment?

  2. Why controversy? • FCC more aggressive and going further in interpreting the Telecom Act than the courts believe they should be • Remember: courts are to assure that the FCC follows due process, and does not act in an arbitrary manner

  3. UNE controversy • How do you decide what elements ILECs have to provide? • FCC—interprets this in the broadest terms: if any CLEC under any circumstances would find it useful to have access to the UNE, then it should be provided • Overturned by the Supreme Court—FCC should look at whether the use of the UNE is necessary and if the lack of the UNE would impair the CLEC • Despite the Supreme Court’s decision, the FCC continues to be aggressive in this area

  4. FCC’s UNE list • Unbundled local loops • Local switching • Tandem switching • Interoffice transmission facilities • Shared facilities between end office and tandem • Dedicated facilities between LEC offices and between LEC offices and CLEC offices • Databases and signaling systems • Including OSS systems

  5. FCC’s additions, despite court decision • Added sub-loop unbundling • Added customized routing • Required “conditioned loops” – prepared for xDSL service • even though this is a “superior quality requirement” – superior quality rule struck down by the courts • Line sharing

  6. Re-bundling issues • FCC required ILECs to re-bundle UNEs according to CLEC request, even if the UNEs hadn’t been bundled before • Court found that ILECs couldn’t unbundle UNEs that had been combined in their own network • Court found that the ILECs didn’t have to bundle UNEs that hadn’t been bundled in their own network

  7. New Commission—New Approach • First Triennial Review of UNEs • Asks for comments on how to measure “necessary” and “impair” • Practice has been to set forth network element definition and then make determination whether lack of access to element would be impairment—asks if should first identify impairments and then define network elements to specifically address impairment • Asks whether to modify or limit ILEC unbundling obligations to encourage investment • Asks whether inter-modal providers should be seen as competitive alternative to ILEC network

  8. More Triennial Review Questions • Asks to what extent universal service and access charges should be considered in unbundling analysis • Asks if unbundling rules should differ based on type of CLEC customer, type of CELC carrier, geography • Asks for comments regarding impact of removing UNE requirements on Section 271 • Asks for comments regarding role of the State in unbundling requirements • Asks to what extent financial impact of UNE changes should be considered

  9. Pricing Issues • For UNEs, FCC required use of TELRIC • Prices based on the incremental forward-looking cost of a hypothetical, state-of-the-art, ideally efficient network • Proxy prices for states to use if don’t have enough to set TELRIC prices • For wholesale prices, FCC required “avoidable costs” to be those that hypothetically can be avoided, not those actually avoided • Set 17-25% off retail rate as proxy for states to use

  10. Pricing and the Appeals Courts • Appeals Court upheld use of forward-looking costs • Rejected the idea that costs be based on a hypothetical network instead of the LEC’s actual network • Rejected wholesale discounts based on costs that could be avoided; found that discounts should be based on actual avoided costs • Struck down proxy prices • FCC can design a pricing methodology for the states, but not the actual prices to be used by the states

  11. Pricing and the Supreme Court • May 12th decision: a victory for the FCC • Found in favor of use of TELRIC instead of historic costs—denied argument that “ cost” meant past cost to ILEC--also said FCC could require states to use TELRIC • Denied 5th Amendment takings argument because no unjust TELRIC rate had been presented • Found that FCC could rely on a hypothetical, most-efficient cost model • Found that the FCC could require ILECs to combine UNEs when CLECs couldn’t do it themselves

  12. Collocation • FCC interpreted this requirement very broadly • CLEC could bring in virtually any equipment, and even use the LEC facility to interconnect its equipment to another CLEC’s equipment • CLEC could determine where to place its equipment in the LEC office, even requiring LEC to remove its own equipment

  13. The courts and collocation • Only equipment necessary to interconnect with the LEC’s network is to be collocated • The LEC is to have discretion about where the equipment will be placed • LECs may require CLECs to use separate entrances, separate floors, isolated rooms

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