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WC 05-25, GN 13-5 et al: USTelecom Ex Parte; USTelecom staff met with FCC Representatives

Ex Parte

On Monday, June 22, 2015, Jonathan Banks, Patrick Brogan, and the undersigned of the United States Telecom Association (USTelecom) met with Matthew DelNero, Carol Mattey, Deena Shetler, Randy Clarke, Daniel Kahn, Michael Ray, David Zesiger, Eric Ralph, and Vanessa Riley of the Wireline Competition Bureau (WCB) in person, and Michele Berlove, Heather Hendrickson, and John Visclosky of WCB by telephone to discuss certain aspects of the above-referenced proceedings.

USTelecom stressed the overall importance of the Commission taking every step to encourage the transition to modern fiber and IP networks. These networks will bring consumers and businesses untold benefits from faster and more robust connectivity to the Internet, data and applications. We emphasized the need for reasonable guidelines and/or interim procedures to apply when incumbent LECs (ILECs) decide to retire their TDM-based products and services, consistent with the Commission’s stated goal of “maintain[ing] established rules and decisions that provide for wholesale access to critical inputs” while the Commission works through the special access proceeding. We explained that the proposals being offered by several entities that use ILEC wholesale inputs appear to be designed primarily to preserve their own particular approach to serving customers, potentially on a circuit-by-circuit basis, rather than to ensure that end user customers have an adequate replacement service option. The appropriate inquiry is whether there are adequate substitute services available from the end user customer’s perspective. Further, we stated our belief that new rules, interim or otherwise, are not necessary to evaluate whether the loss of TDM-based services in a particular community would adversely affect the public convenience and necessity, because existing rules are adequate to identify and address any potential harms. Moreover, the Commission’s discretion under section 214 is not an appropriate mechanism to address concerns with wholesale last mile inputs, especially if used to reestablish price regulation for certain inputs (Ethernet, e.g.,) or to create new obligations to provide unbundled access to DS1 and DS3 capacity loops over fiber or UNE-P obligations after TDM-based services are discontinued.

We also explained that pricing for special access services, which are sold as retail, not wholesale services, is already subject to the Commission’s just and reasonable standard throughout the country, and to additional levels of regulation depending on whether they are offered in a competitive geographic area subject to pricing flexibility, and that the Commission need not establish a new national framework to govern the pricing of such services when they replace TDM-based services. In addition, we asked that the Commission not otherwise modify regulations affecting the provision of special access services and ILEC services used as wholesale inputs by competitors until after it has assessed the special access data collected for the purpose of evaluating the competitiveness of those markets.

Regarding the section 214 process, we expressed our belief that additional restrictions proposed by several parties threaten to derail or significantly delay technology transitions by making ILECs choose between more investment in next generation networks and maintaining legacy networks. Likewise, the Commission’s proposed rebuttable presumption that where a carrier seeks to discontinue, reduce, or impair a wholesale service, that action will discontinue, reduce, or impair service to a community or part of a community is unnecessary and not warranted, in part because it fails to consider the existence or adequacy of substitute services that the Commission has long recognized in both its UNE and Special Access proceedings.

We also referenced the 6 principles for governing section 214 discontinuances of TDM-based products as modified by COMPTEL, acknowledging that having ground rules to facilitate the transition from TDM to IP is sound policy. However, we cautioned that the Commission should not accept the invitation to require that replacement products be provided at the same price as legacy products, nor resurrect abandoned requirements to provide UNE-P-type replacement services under the guise of preserving existing competition; such actions would overturn existing rules, and thus require a rulemaking. In the alternative, we proposed a more balanced approach that takes into account the costs to ILECs of maintaining multiple networks indefinitely, suggesting among other things that any transition measures adopted be limited in duration (one or two years, e.g.) to allow competitors who rely on wholesale inputs ample time to make alternative arrangements.

USTelecom also explained why the Commission should allow technology transitions to happen unencumbered by unwarranted restrictions and delay. Markets are open and competitive, even more so when competition from cable companies is taken into account. As detailed in the Attachment to this filing, non-ILECs already account for over 45% of business lines according to FCC data. The availability of other alternatives, including competitive facilities-based and special access services, make prolonged access to ILEC inputs post-transition unnecessary in all but potentially a few discrete geographic markets where competition may not yet be feasible. The Attachment also reviews data that show a trend away from competitor reliance on ILEC UNEs; in particular, we discuss the relative development of facilities-based and wholesale competition in the marketplace.

Finally, we suggested that the Commission could credibly establish a presumption that ILECs, whose CLEC and cable competitors now control over 45 percent of business lines, are no longer dominant and have no true monopoly advantage in most or all voice markets nationwide, similar to how the Commission recently found that cable operators are now subject to effective competition because DBS providers have captured almost 34 percent of multichannel video programming distributor subscribers.

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