FCC Issues Long-Awaited Triennial Review Order

Six months and one day after the Federal Communications Commission announced its ruling in the Triennial Review, the agency today released the voluminous order. Service providers -- incumbents and competitors alike -- have assembled teams to pore over every word of the document -- and expressed as much relief that the wait is over as reaction to its contents. FCC commissioners voted in February on adopting new rules, but just issued a press release and four-page attachment at that point, which raised more questions than answers. In issuing today's order, the FCC noted "the path to the rules and policies set forth in this Order has been neither straight nor easy." While the statement refers to the wrangling in the industry leading up to the order, it could characterize the well-publicized disagreements among the commissioners as well. As expected Chairman Michael Powell issued a separate statement approving of the portions of the order addressing broadband relief, but dissenting on preservation of UNE-P. He says the majority's decision on switching is "remarkably similar to the prior two fatal decisions. "Apparently, the majority is a big fan of UNE-P because it has contorted the letter and spirit of the statute and the court's interpretation of our responsibilities in an effort to ensure its indefinite preservation," he writes in his statement. As expected, Commissioner Kathleen Abernathy also dissents from the local switching portions of the order, while commissioners Michael J. Copps and Jonathan Adelstein are approving. Both Copps and Adelstein expressed concern over parts of the broadband relief. Commissioner Kevin J. Martin reissued his statement from February in approval of the order. Chairman Powell also admonishes his colleagues for "abdicating" the responsibility of crafting clear unbundling rules to the states - an action he believes will lead to "a morass of regulatory activity that my very well wilt any lingering investment interest in the sector." The FCC granted state regulators the authority to determine whether competitors are impaired without access to the incumbent networks based on economic and operational criteria. Under the FCC's ruling, regulators have nine months to analyze whether impairment exists or not in a particular market. If a state regulator finds no impairment exists, the commission must establish a three-year period for carriers to migrate off a local resale platform. Tonight and for the next few weeks, the industry will be busy analyzing the details of the order. PHONE+ reported earlier that BellSouth Corp. has assigned 21 teams in the federal regulatory department to the task. About 25 people from the legal department and federal regulatory group of Verizon Communications Inc. will initially read the order. Competitive carriers have fewer resources on the job. At Z-Tel Communications Inc. about four people will initially read the order. However, trade groups and other organizations representing competitive phone companies will help in scrutinizing the new rules. Competitive association CompTel issued a statement about its initial assessment of the order. "Though it will take time to analyze the details of this lengthy order, CompTel is heartened that the FCC preserved access to unbundled switching," states CompTel President H. Russell Frisby Jr. "Moreover, CompTel is encouraged by the preservation of dedicated transport and dark fiber - two key elements necessary for the continued development of vibrant wholesale markets. He adds CompTel remains wholeheartedly disappointed about the broadband portion of the order. "The unjustified discontinuation of line-sharing and premature deregulation of broadband access to customers nationwide will only serve to strengthen the Bells' monopolistic grasp," he states. The PACE Coalition, which is composed of 18 small new entrants to the local market that rely, at least in part, on UNE-P to offer competitive local services to the mass market of residential and small businesses, also issued a statement. "While several aspects of the majority's decision fall short of the clear requirements of the Act, we are pleased that with regard to UNE-P access, the majority rejected Chairman Powell's radical attempt to reverse the Commission's pro-competitive policies and rewrite the 1996 Act," says PACE Chairman Peter Karoczkai, vice president of InfoHighway Communications, says. "We look forward to working with the state commissions to assure that the benefits of competition for residential and small business customers continue." Covad Communications was another of the early respondents, issuing a statement shortly after the order's release. "The FCC's Triennial Review line-sharing decision, while still fundamentally flawed, includes a grandfathering provision for all Covad lines in service that was not disclosed in the February announcement," said Charles Hoffman, president and CEO of Covad Communications in a press statement. "The decision has no impact on Covad's business services, which account for the majority of our revenues. More importantly, the order preserves line-splitting, which allows Covad to compete in the consumer broadband marketplace through partnerships with AT&T, Z-Tel, and other local phone service providers as we continue our progress to profitability." "It took the FCC two years to decide and write the order; we need time to read and understand it, " says Tom Tauke, senior vice president of public policy and external affairs for Verizon. "The world is changing so fast that the order may already be outdated. Every day it becomes more and more apparent there's a whole new world of communications around us that connects people in ways that weren't even imagined just a few years ago." Some heralded the order's broadband provisions as improving the opportunity and incentive to deploy fiber-to-the-home (FTTH) or fiber-to-the-premise (FTTP) systems. "While clearly no one is happy about the unnecessarily long delay after the February vote, the most important thing is that the FCC got it right in deregulating new, last-mile broadband facilities on a national basis," said Telecommunications Industry Association (TIA) President Matthew J. Flanigan in a statement. "In fact, the broadband deregulation portion of the order already is making a significant contribution to the beginnings of a turnaround in the telecommunications industry...as we maintained from the start in this proceeding, this type of deregulation of broadband-capable facilities gives ILECs and other facilities-based carriers the opportunity to invest in new technologies and aggressively compete in the broadband market. Consumers will be the ultimate beneficiaries of the adoption of the proposals from TIA and the High Tech Broadband Coalition because it will result in high-quality, widespread and affordable broadband services." A vocal critic of the FCC's delay in issuing the order, Walter B. McCormick Jr., president and CEO of the United States Telecom Association, expressed relief at the issuance of the order and added, "The Triennial Review was a tremendous opportunity for the FCC to help stimulate real competition that would benefit consumers and the economy by spurring innovation and encouraging job growth. Now that it's finally out, it will take some time to read through the document and to understand its full impact on consumers, the economy and the industry going forward." The order does not become effective until it is published in the Federal Register in a week or two.