Telecommunications companies say they are willing to enter commercial negotiations with the regional Bells to set prices to lease their local phone networks, but the industry appears skeptical an agreement can be reached.
In a rare display of unity, all five FCC commissioners have called on the industry to enter commercial negotiations to reach agreements concerning the availability and rates of UNEs. FCC rules were set to expire this month unless a federal appeals court grants a 45-day extension of a stay, or the Supreme Court agrees to review the top U.S. regulator’s phone rules.
Trade associations and telecom providers say they are willing to enter talks with the biggest local phone companies, but there is a layer of cynicism in their remarks. John Windhausen, president of the Association of Local Telecommunications Services (ALTS), which represents phone companies competing with the Bells, said the group accepts the FCC’s request. But he added a caveat. “Our past experience has been that the RBOCs only offer the minimum that they are required to provide by law and that they have little incentive voluntarily to provide competitors with reasonable cost-based access to the network,” Windhausen says of ALTS in a prepared statement.
AT&T Corp. General Counsel Jim Cicconi says negotiations “are inherently difficult given that the Bell companies control the sole supply of a needed good. Nonetheless, AT&T has always been willing to negotiate with the Bells because we prefer the business security of a fair, longterm commercial agreement that benefits both parties, if one can be achieved.”
Sue Platner, co-founder of Illinois-based consulting firm The Northridge Group is among the skeptics. She says there is a wide disparity between what the Bells want to charge competitors to lease their networks, and what competitors feel are reasonable rates.
“I really [believe] they are much further apart in terms of what the ILECS think they need and what the CLECs think they need,” she says.
The FCC has released unbundling rules in three separate orders since 1999, yet the regulations have not withstood court scrutiny. On March 2, the District of Columbia Circuit Court of Appeals overturned FCC rules, saying the regulator did not have the right to designate rulemaking authority to state public service commissions. The court also struck down the FCC’s national finding that phone companies are impaired without access to unbundled switches.
As xchange was going to print, it was not known whether the Office of the Solicitor General (SG) within the Justice Department would file an appeal before the Supreme Court.
“As a practical matter, the parties have always been free to reach voluntary agreements resolving all matters but so far they have been unable to do so. The question is whether the incentives will change such that new negotiations will succeed where past negotiations have failed,” Legg Mason analysts say. “Whether the parties will be able to reach such agreements remains to be seen and there will be much complexity; but we believe the [Bush] administration believes that by threatening both sides with the risk of an adverse decision by the SG on whether to ... (seek Supreme Court review) that the uncertainty can create an incentive for reaching a compromise.”
