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Unbundling Relief – Nearly a Quarter of a Century in the Making

08.06.2018

On the day when comments are due to be filed with the FCC, we should take a moment to sift through the opposition to USTelecom’s request for forbearance, on behalf of broadband providers and their customers across the country, from monopoly-era obligations that still apply only to a handful of competitors in a thriving communications marketplace; a marketplace that the Commission has repeatedly declared to be open and competitive. Those obligations made sense in 1996, when incumbent carriers provided voice service with very little competition, and internet-based voice (VoIP) and mass market broadband services were not yet a “thing.” Not so much today; only a projected 11% of households will subscribe to incumbent switched access voice lines this year, down dramatically from 93% of household subscribers to those services in 2003.

It has been a long time since incumbent carriers have dominated the voice communications marketplace, and they never had any inherent market advantage or power with regard to voice or data packet-based services – at least not according to the FCC, which never imposed competition-inducing regulations over those services.   

So why unbundling relief, and why now?  It is not disputed that some companies still rely on purchasing or leasing unbundled network elements to serve their voice and data services customers, and say it would be challenging to serve their customers without the effective price subsidy mandated unbundling has provided them for over two decades.  But it is also indisputable that far more companies choose other paths to compete, opting to build and use their own facilities or to negotiate commercial agreements for the services or network elements they do not own.  

These companies, large and small, are directly responsible for the monumental shift in incumbent carrier market share.  They have gained and increased market share using far fewer unbundled loops (now less than 4% of all switched access and VoIP lines), with fewer than half as many unbundled loops in use today than in 2005.  Moreover, less than 3% of voice lines are resold incumbent lines.  So, continuing to prop up this small and shrinking mode of competition hardly seems like good regulatory policy.

We also hear, loud and clear, a handful of competitors claiming that there is not always a sound business case for building in certain areas. But some companies are using their resources and innovation to do just that.  Note, for example, a recent full-page ad in The Wall Street Journal in which one broadband provider noted it has built voice and data network solutions that can reach all locations, including remote locations, of a distributed business enterprise.  

So make no mistake, in all but perhaps a few instances these unbundling-dependent competitors are making a choice – a conscious business decision to maintain a business model that relies on forced sharing of a competitor’s facilities indefinitely rather than investing in their own infrastructure.  To those who claim unbundling is their only choice for providing service, we look forward to seeing their data in the record supporting such claims.  We understand why giving up price-controlled unbundling is a difficult choice to make, and why choosing not to build may be easier or more convenient.  But we also think (and apparently the FCC agrees) the decision not to build does little to support the FCC’s goal of achieving market-driven, long-term, and self-sustaining competition.

Furthermore, soon after filing we reached out to companies who expressed concerns about our petition to ask how much time they would need to end their dependence on unbundling.  That led to our revised transition proposal that, if granted, would give any remaining potentially affected providers almost three years to negotiate commercial agreements that would enable them to maintain access to those same facilities, or to build their own.  And for those companies that provide data proving they truly have no available alternatives to unbundling, we are confident the FCC, working with industry, can address their unique needs on a case-by-case basis. 

Competitors and competition have had twenty-two years – almost a quarter of a century – to take full advantage of the Telecom Act’s market-opening provisions.  The latter has developed and flourished as intended, while a select few of the former are still trying to get there.  So how long is long enough?  From inception to achievement, putting a man on the moon in the Apollo program took less than a decade.  Transitioning away from unbundling obligations may be hard for some, but it is far from rocket science.  Granting the requested forbearance relief will allow all providers to compete on a level playing field and lead to more and better broadband for more customers and communities.