Applying the 1996 Act

TC 310May 21, 2008

Current Event

FCC investigating cell phone contract termination Cancel early Reduce over time Take state jurisdiction away Proposed by Verizon

What concepts can we apply?

UNEs

Unbundled Network Elements What are network element examples?

Importance of UNEs Economies of scale prohibit entry without Network effects prohibit entry without

Interconnection not sufficient for competition Application of strong essential facilities doctrine

UNE-L

Refers to just the loop/transport being leased ILEC offers wholesale loop/transport lines at

TELRIC prices CLEC leases these lines, connects to their own

switch. Just loop leasing requires collocation Loop/transport known as enhanced extended links

Economically more efficient.

Facilities based competition

UNE-P

Refers to the leasing of the entire platform All elements of the ILEC are leased by CLEC Leased based competition

Rebranding of ILEC services Allowed to offer their own pricing platforms Not offering innovative services

Similar to resale, but.. Repackaging Cheaper

Advantage UNE-P

UNE-P over UNE-L UNE-P over Resale

Resale based on ILEC retail pricing UNE-P based on TELRIC pricing

1996 Act aimed at UNE-L Innovative services

UNE-P good for CLECs, bad for ILECs and customers?

Fights about UNE

ILECs fight for competition? UNE-P adds no value, not real competition No incentive for investment Hurts ILECs; TELRIC pricing

CLECs UNE-P allows competition where it would not be Doesn't hurt ILECs Near structural separation between retail and

wholesale ILEC arms

Local Competition Order

1996 FCC Report and Order, dealing with Act All elements available for UNE Challenged

Really resale end around Failure of impairment standard of section 251

Impairment sticks FCC must decide which elements are necessary to

competition, will impair CLECs Court orders FCC to be more specific

UNE Remand Order

FCC tries again in 1999 Removes operator/directory assistance Adds more specificity to line elements

D.C. District invalidates again Decision known as USTA I

Unbundling is not without costs Innovation for ILECs and CLECs suffers Impairment is a balance to leasing rights, FCC needs to

find balance.

Triennial Review Order

2003 FCC attempt to deal with UNE problems Pushes onto States Impairment is when non-bundling makes entry

uneconomical. UNE-P favored by States Hot Cuts are foundation

Too difficult for ILEC to do this without major costs to CLECs and customers

USTA II

ILECs argue Triennial Review Order violates USTA I court order

District court sides with ILECs again Violated obligations by subdelegating Definition of impairment still in violation of USTAI

FCC makes not of this in the Order Hot Cut orders do not have empirical support

Supreme Court does not grant certiorari

USTA II Repercussions

Switches removed UNE-P invalidated?

States still applying Should be preempted, impairment decision of FCC

UNE-L should be expanding CLECs just leaving

AT&T not seeking further customers following USTA II ILECs Win Applies only to circuit-switched networks, old tech

Why Important

Battle between FCC and Courts over interpretation Courts balance FCC against intent of Congress FCC more competition biased than Congress?

Repercussions are minimal Signal of phasing out of PSTN Signal of convergence