Author

Patrick Halley

The FCC “Shall” Forbear…

A year ago, USTelecom petitioned the Federal Communications Commission (FCC) requesting forbearance from rules written over 20 years ago intended to promote competition in the local telephone market.

What has happened since the rules were enacted 23 years ago?

A communications revolution that has ushered in massive competition in the voice and broadband marketplace rendering the rules obsolete. The competition Congress sought to fuel in the 1996 Telecom Act has arrived.

Recognizing this, the FCC took an important step in April by granting relief on parts of our Petition, forbearing from enforcement of duplicative pole attachment rules, outdated provisions regarding long-distance service, and burdensome and outdated reporting requirements.

Those were necessary steps, but gave consumers only part of what Congress demanded. Now it’s time to roll up our sleeves and tackle the rest of the Petition—granting forbearance from legacy rules requiring incumbent local exchange carriers (ILECs) to unbundle and resell access to parts of their networks at below-market rates set by regulators rather than the marketplace.

There is no rational argument in 2019 to justify subjecting one-time “incumbent” wireline providers, whose market shares have declined precipitously relative to wireless and cable competitors, to continue bearing the weight of intrusive regulatory requirements that do not apply to their rivals.

USTelecom submitted a letter to the FCC today supplementing the record with information further demonstrating just how competitive the communications marketplace is.

Consider this:

  • Since the adoption of the unbundling and resale mandates, there has been a staggering decline in ILEC local voice subscriptions: 186 million in 2000 to about 35 million in 2018. In fact, only 11 percent of U.S. households have an ILEC local voice line.
  • Approximately 60 percent of Americans have abandoned wireline voice service entirely in favor of wireless alternatives. Of the remaining 40 percent, a majority obtains service from a non-ILEC (typically cable or voice over Internet protocol “VoIP”).
  • About 90 percent of the country’s housing units and population are served by a cable competitor, companies that are aggressively and successfully bidding to serve small businesses as well.
  • In addition to “last-mile” connections, the data also show there is nearly ubiquitous competition for “transport” networks that deliver traffic across the country on a nearly nationwide basis.
  • As of mid-2017, less than 1 percent of total retail voice lines– and approximately 1.5 percent of non-ILEC retail lines– are provisioned as a result of ILEC-specific resale requirements.

When competition has become the rule and not the exception, it no longer makes sense to enforce rules based on an outdated, and factually disproven, notion that incumbent providers have an inherent marketplace advantage. In fact, Congress specifically articulated in the 1996 Telecom Act that the FCC shall forebear from these rules when regulations are rendered unnecessary, or no longer in the public interest.

There is no legal or policy justification for requiring the continued provisioning of unbundled network elements (so-called “UNEs”) and ILEC-specific resale mandates. A regime that imposes special burdens on providers that hold a small and shrinking share of the market distorts competition and harms consumers by slowing the transition to modern networks. If the Commission truly wants to incent greater last-mile facilities-based competition, and in particular to promote deployment by ILECs to ensure a check against growing cable dominance, the solution is most certainly not to continue burdening these companies—and only these companies—with such outdated and costly rules.

Let’s also not forget this—the elimination of UNEs does not mean ILEC facilities go away. Those companies who rely on ILEC infrastructure—rather than investing in their own—can continue to do so. USTelecom members have committed to continue offering wholesale access to their facilities after the FCC grants forbearance, just not at outdated below-market regulated rates. Furthermore, USTelecom also has committed to a transition that would keep existing UNEs in place at the same rate until February 2021—nearly three years after we filed our petition and almost 25 years to the day President Clinton signed the Telecom Act of 1996 into law.

As USTelecom highlighted in today’s filing, if the Commission elects not to grant nationwide relief, at a minimum, the record supports a grant of partial forbearance from the continued application of UNE and ILEC-specific resale mandates in any areas presently subject to competition for voice and broadband service. The Commission is fully authorized to do so under the text of the statute, the data supports such relief, and the Commission has granted similar partial relief on multiple occasions.

Granting this long overdue regulatory relief will help level the regulatory playing field and enable ILECs to focus on next-generation investments instead of subsidizing competition at below-market rates.

 

More information on USTelecom’s forbearance petition can be found here.

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