CompTel Urges FCC to Keep UNE

CompTel urges FCC to reject proposals that radically undermine the principles of the ’96 Telecom Act

February 6, 2003

4 Min Read

WASHINGTON -- Seven years after the passage of landmark legislation that broke down local phone monopolies and brought a myriad of benefits to consumers, the FCC is poised to make a critical decision in its Triennial Review that could set back all the progress made to date. FCC Chairman Michael Powell’s push to eliminate the unbundled network element platform (UNE-P) is in direct conflict with the Telecommunications Act of 1996 and would result in a widespread chill over the competitive industry and the re-monopolization of the local phone market. “Recent reports suggest that a radical rewrite of pro-competitive policies established under the Telecom Act of ’96 has been proposed behind closed doors at the FCC,” said CompTel President H. Russell Frisby, Jr. “The Commission should not take it upon itself to reverse course on policies that are just now starting to bear fruit.” Telecommunications competition has been an important engine of economic growth. Seven years after the passage of the ’96 Act, the telecommunications industry has transformed the nation’s economy--investing hundreds of millions in network deployment, creating thousands of new jobs and exploiting the promise of the Internet with the delivery of high-speed broadband services. Today, competitive local exchange carriers (CLECs) and Internet service providers (ISPs) are competing vigorously with the Bell companies. In fact, CLECs now provide service to nearly 12 percent of the nation’s local telephone lines, according to the FCC, compared with just 4 percent at the end of 1999. “Rule changes at the FCC could stop telephone and Internet service competition in its tracks.” Frisby continued, “It also could lead to the demise of small telecom businesses and eliminate much needed jobs.” Since the Telecom Act was enacted:

  • Local phone rates have decreased;

  • Many consumers now have a choice in local phone service providers;

  • If current rules remain in place, consumer could save over $9 billion in phone bills;

  • Competitive carriers and incumbent carriers have spent over $150 billion in capital expenditures since the ’96 Act became law;

  • Competitive carriers now serve more than 10 million telephone lines nationwide through UNE-P. The majority of competitors using UNE-P primarily serve residential and small business customers, which have been largely ignored by the Bell companies through the years;

  • The Supreme Court has weighed-in noting the use of UNEs is an important step in the transition to facilities-based competition. Furthermore noting that wholesale strategies are fundamental to the development of a competitive market;

  • In May 2002, the Supreme Court decisively rejected the Bells' arguments, ruling that the FCC had the authority to develop a UNE pricing standard, and that TELRIC was appropriate;

  • In nearly every case where state regulators have examined Bell wholesale rates for UNEs, the result has been a reduction in rates that competitive carriers must pay, not an increase;

  • Bell companies’ profits have taken a hit because the companies have squandered hundreds of millions of dollars in bad foreign investments. Moreover, the Bells have paid billions of dollars in fines for anti-competitive behavior.

Frisby said, “Rather than contemplate harmful actions that could further weaken U.S. telecommunications companies in these difficult times, the FCC should explore means to stimulate telecom investment. A change in the key rules affecting UNE availability could only serve one purpose – to strengthen the market dominance of the Bell companies to the detriment of consumers and the economy.” According to a New York Times article, John Mayo, dean of Georgetown University’s business school said that “any move by the Federal Communications Commission to make the rates, terms, or availability” of the current network pricing scheme “less attractive at this point will not create more competition but will, rather, almost certainly - and perversely – spell the end of the development of local exchange competition.” CompTel believes that the most effective way to stimulate telecom investment and thereby give the overall economy a shot in the arm is through support of policies that foster competition. To that end, CompTel calls on the FCC to implement and enforce the law – The Telecommunications Act of 1996. “We face the very real possibility that the Bell companies could re-monopolize the industry which will lead to higher phone bills and fewer service providers,” said H. Russell Frisby, Jr., president of CompTel. Competitive Telecommunications Association (CompTel)

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