The competitive telecom industry appeared to be on the precipice of disaster when an eleventh-hour deal pulled it back from the edge. "It can best be described as our day of the hanging chad," says Dave Dorman, chairman and CEO of AT&T Corp. "We got three votes, and we don't want to go back and count them again."
Although the decision preserved UNE-P, the picture is clearly a mixed bag for competitive carriers and RBOCs alike. That's because the FCC also granted state regulators the authority to determine whether CLECs are impaired in competition without access to the incumbent networks based on economic and operational criteria. State regulators have nine months to analyze those issues in a given market.
"The states are key," says Dorman. "All we did, folks, was get the chance to go another round." Dorman anticipates the industry will see many "Tauzin-Dingell bills" in the future. "They won't take it back to the FCC because the facts are on our side," he adds.
Even though the UNE-P ruling is considered a positive one by competitive carriers, it's expected to be appealed by competitors as well as the RBOCs. "We'll probably appeal the FCC ruling even though it's favorable," says Gregg Smith, CEO and chairman of Z-Tel Communications Inc. "Our position is switching is required."
Of course, UNE-P has enabled many competitive carriers to get a foot in the door -- and build a customer base -- until they can justify investment in network facilities.
UNE-P clearly has been the most successful method of local service entry by competitive carriers since the Telecommunications Act of 1996.
Competitors serve 22 million access lines. Half of those lines serve small business and residential customers. Competitive carriers provide at least 11 percent of access lines nationwide. And more than 10.2 million competitive access lines -- or 35 percent of all access lines -- at the end of 2002 were UNE-P based.
On the down side for competitive carriers, the FCC removed line-sharing requirements that allowed broadband service providers to lease the RBOCs' high-speed portions of the loop. Broadband providers have three years to migrate customers to new arrangements. The price for the high-frequency portion of the loop will increase incrementally each year of the transition.
Things could get even hairier if the RBOCs get more aggressive in bringing fiber closer to the home, since all of those fiber builds now are barred to unbundling. Probe Research Inc. rightly points out that every time an RBOC installs and says it's installing new fiber or fiber equipment, it could throw a monkey wrench into CLEC plans. "As long as there is fiber somewhere in the vicinity, there does not have to be unbundling," says Probe COO Allan Tumolillo. "True, the ILECs will be caught on occasion and fined appropriately; meanwhile a CLEC's business plan just got trashed."
And so, as we all knew would be the case, the fight continues.
Until next time,
Paula Bernier
Editor in Chief
