Posted: 11/15/1998
Comments in FCC Proceedings Provide Survey of Telecom Industry Priorities, Hopes and Fears
By Jon Canis
As reported in earlier columns, Section 706 of the Telecommuni-cations Act of 1996 (there are more than one; this is the one in the back, under Title VII--Miscellaneous Provisions) mandates that the Federal Communications Commission (FCC) and state regulatory commissions take steps to "encourage the deployment of advanced telecommunications capability to all Americans." This ostensibly innocuous provision required the FCC to initiate an inquiry into how best to implement this mandate by Sept. 8, 1996, and complete the inquiry within six months. The FCC responded to this mandate by initiating two different proceedings. The first was a Notice of Inquiry, which poses several broad questions about the current state of local telecom carrier networks, long distance backbone networks, wireless networks, satellite systems and cable TV networks and the technologies they all employ. The second proceeding was a Notice of Proposed Rulemaking (NPRM), which reaches tentative conclusions about the best way to promote advanced telecom capabilities, and proposes a number of new rules designed to do so.
The comments in these two proceedings, which together form a stack of paper about five feet high, reflect comments by incumbent local exchange carriers (ILECs), competitive local exchange carriers (CLECs), interexchange carriers (IXCs), cable TV carriers, wireless carriers, Internet service providers (ISPs) and state public utility commissions (PUCs). The following is a brief overview of the arguments raised by different segments of the industry:
ILEC Separate Affiliates
ILECs: ILECs contend that separate affiliates are unnecessary and will impede advanced services deployment by imposing unnecessary costs, and promoting inconsistent regulatory treatment by state commissions. Specifically, ILECs ask the FCC to adopt a narrow definition of "successor or assign" that would make it easier for ILECs to launch affiliates using ILEC equipment, capital, personnel and marketing resources. Further, ILECs contend that separate affiliates should not be subject to Section 251(c) interconnection obligations, and should not be restricted to offering data services, but rather should be permitted to offer interstate services on a non-dominant basis.
CLECs: CLECs universally argue that the FCC's proposed separate affiliate rules do not go far enough to ensure that all transactions between ILECs and their affiliates will not be discriminatory or anti-competitive. To address their concerns, CLECs propose strengthening the rules by adding prohibitions against ILEC-to-affiliate transfers of funds, essential network facilities, customer proprietary network information (CPNI) or other marketing services.
IXCs: IXCs advocate the adoption of stronger separation rules than the FCC has proposed in the NPRM, along with a plan to make certain that those rules are vigorously enforced. To that end, IXCs propose that the FCC use a broad definition of "successor or assign," to guarantee that ILECs do not end-run the interconnection obligations of Section 251(c) of the Telecom Act by making wholesale transfers to affiliates.
ISPs: ISPs have asked the commission to adopt rules that level the playing field between ILEC-affiliated ISPs and independent ISPs. Specifically, the ISPs urge the commission to provide ISPs nondiscriminatory access to network information on the same basis as affiliated ISPs, as well as mechanisms to enforce the rules.
Cable Companies: The cable industry is apprehensive about the anticompetitive results of allowing ILECs to transfer equipment and services in order to escape Section 251(c) obligations. Cable companies argue that the FCC should adopt bright-line structural separations rules that would prevent the transfer of any kind of equipment to ILEC affiliates.
Wireless Carriers: Wireless carriers are in patent disagreement with the FCC's decision to adopt separate affiliate rules because they are not carrier- or technology-neutral. Wireless carriers argue that wireless technology for both mobile and fixed users would better promote the goals of Section 706 to encourage the deployment of advanced technology.
State PUCs: Several state commissions have taken pains to remind the commission that state commissions share jurisdiction under the Telecom Act and urged the FCC to strengthen its rules.
Equipment Manufacturers: Equipment makers argue that in requiring separate affiliates, the FCC should not preclude the use of integrated digital subscriber line (xDSL) solutions.
New Forms of Collocation
ILECs: ILECs argue that there is no need to establish national collocation rules because ILECs are already offering most of the alternative collocation arrangements (i.e., smaller cages, cage sharing and "cageless" or non-enclosed collocation) arrangements the commission is proposing. Further, ILECs argue that the FCC should not interfere with state commissions' administration of collocation because states are better able to assess local conditions.
CLECs and IXCs: CLECs and IXCs are virtually in universal agreement that the FCC should set forth national collocation standards that mandate that a variety of new collocation options, including shared space collocation, cageless collocation and reduced space collocation be implemented to ease barriers to entry erected by the high costs of collocation. In addition CLECs and IXCs encourage that the FCC's national standards contain standard provisioning intervals.
ISPs: ISPs generally advocate the adoption of any FCC proposal that would improve the right of access to loops.
Cable Companies: Cable companies argue that the FCC must remove entry barriers created by current collocation rules. Therefore, the FCC should adopt national physical and virtual collocation rules that address the cost, provisioning, and space limitations of collocation, including requiring that alternative arrangements be made available.
State PUCs: State PUCs cautiously support the adoption of national minimum collocation standards, with the FCC's recognition of the states' authority to impose additional standards.
Equipment Manufacturers: Equipment manufacturers argue that the FCC should adopt rules to allow CLECs to collocate equipment in areas adjacent to the ILEC's central offices to address space exhaustion problems.
Restrictions on Collocated Equipment
ILECs: ILECs argue that the FCC should narrowly construe collocation obligations to allow the collocation of equipment for the sole purpose of interconnecting with an ILEC's network to gain access to unbundled network elements (UNEs). ILECs encourage the commission to prohibit collocation of enhanced services equipment, and require that equipment meet Network Equipment Building Standards (NEBS) safety and performance standards.
CLECs and IXCs: CLECs and IXCs argue that there should be no restriction on the functionality of equipment that can be collocated in ILEC central offices. The FCC should expressly provide for the collocation of remote switching modules, digital subscriber line access multiplexers (DSLAMs), as well as enhanced services equipment, including routers and equipment used to provide Internet protocol (IP) telephony service.
ISPs: ISPs encourage the FCC to reject any restrictions on the type of equipment that can be collocated, and instead adopt flexible national standards that allow for the attachment of electronic equipment at the ILEC central office.
State PUCs: States generally concur that CLECs should be allowed to collocate equipment in both the central office and at remote terminals, including equipment such as DSLAMs.
Equipment Manufacturers: Equipment manufacturers argue that the commission should allow CLECs to establish uniform national standards for equipment, but should not restrict the type of equipment that can be collocated.
Jon Canis is a partner in the communications practice group of Kelley Drye & Warren LLP. He can be reached at (202) 955-9664.
