Competitive local phone companies supporting millions of residential and small business customers may see their network costs rise during the next few years by several dollars per line under a regulatory ruling that likely is headed for another review before a federal appeals court.
The FCC voted Wednesday to phase out rules allowing discounted wholesale access to the residential networks controlled by BellSouth Corp., Qwest Communications International Inc., SBC Communications Inc. and Verizon Communications Inc.
Competitors like AT&T Corp. and MCI Inc. have one year to transition away from the so-called UNE platform used to sell local analog phone service to residential and small business customers over the Bell networks. The transition applies to competitors’ existing customer base and forbids them from adding new customers under the old regulations.
Federal regulators also adopted new rules competitors will rely on to provide phone and data services to larger businesses over the Bell networks in a ruling SBC said “disregarded the tens of thousands of miles of fiber that our rivals have deployed in virtually all metropolitan areas and cavalierly dismissed alternatives, such as special access, that multiple carriers currently use to compete.”
SBC adds the commission “has adopted an order that is headed for another judicial rebuke.”
Jonathan Lee, vice president of regulatory affairs with CompTel/ASCENT, the organization representing the Bells’ rivals, says the network rules that apply to the business market “seem to focus a lot on potential deployments to the exclusion of actual market evidence.”
Excluding today’s ruling, the FCC has issued wholesale network regulations in three separate orders since 1996. All of the rulings have been overturned on appeals. The current decision “crafts a clear, workable set of rules that preserves access to the incumbent's network where there is, or likely will be, no other viable way to compete,” FCC Chairman Michael Powell said in a statement. “The rules have also been carefully designed to pass judicial muster for I hope we have learned that illegal rules, no matter their other merits, are no rules at all."
Washington insiders have predicted the rates local phone companies such as AT&T and MCI pay for access to the residential networks controlled by the four regional Bells could increase by $7 to $11 per line once the government-mandated UNE platform is no longer available. The Bells long have asserted the rules force them to lease their networks to rivals far below their own costs.
FCC Commissioner Michael Copps has been a staunch opponent of eliminating the network rules, echoing the sentiments of the Bells’ competitors: that competition in the local residential phone market could severely suffer.
"What we have in front of us effectively dismantles wireline competition,” Copps said in a statement. “Brick by brick, this process has been under way for some time. But today's order accomplished the same feat with all the grace and finality of a wrecking ball."
