The Unbundled Network Element Platform (UNE-P) continues to live for now in the form of commercial wholesale network platform services offered by AT&T and Verizon. These services, called Local Service Complete and Wholesale Advantage respectively, provide CLECs unbundled access to ILEC voice loops, switching and transport in one package and provide the most cost efficient method to enter local markets without purchasing costly network facilities. However, they are in danger of ending when the FCC issues its Business Data Services (BDS) Order later this year.

Back on August 7, 2015 when the Commission released its Technology Transitions Order (Docket 13-5), it promulgated rules for ILECs seeking to discontinue legacy Time-Division Multiplexed (TDM) services used as wholesale inputs by CLECs. For a reason that remains inexplicable, the agency tied the continued requirement for a wholesale voice network platform service to the requirement that ILECs provide reasonably comparable replacements for DS1 and above special access services. The Commission specifically stated that:

ILECs must commit to provide CLECs wholesale access to commercial wholesale platform services on reasonably comparable rates, terms, and conditions until the Commission: (1) identifies a set of rules and/or policies that will ensure rates, terms, and conditions for special access services are just and reasonable; (2) provides notice such rules are effective in the Federal Register; and (3) such rules and/or policies become effective (FCC Docket 13-5, Report and Order, Order on Reconsideration, And Further Notice of Proposed Rulemaking, released August 7, 2015 at para. 132).

The agency was well aware that conflating the requirement for a voice service with a proceeding involving dedicated services such as special access and Ethernet made little sense. Thus it sought industry input for a new justification for continuing the wholesale platform indefinitely.

We accordingly seek comment on how to facilitate continuation of commercial wholesale platform services, which we believe serve an important business need for enterprises that seek, among other things, the ability to obtain service from a single supplier at their disparate retail locations nationwide. Granite explains that it and other similarly-situated competitive carriers serve multi-location business customers that have modest demands for voice services at each location by combining value-added services with underlying TDM-based telephone services purchased at wholesale from incumbent LECs. Granite recently submitted a study prepared by Charles River Associates that finds, based on Granite’s own estimate of the per-line added value that its service provides to customers, that loss of wholesale access to incumbents’ voice services would result in customer harm of between $4,443 and 10,168 billion per year.  We note that this study is additionally premised on the expectation that absent regulatory action by the Commission, wholesale arrangements between companies like Granite and incumbent providers will not occur…We recognize that incumbents are currently offering such commercial arrangements in TDM on a voluntary basis and we encourage such arrangements and hope they continue to be standard wholesale offerings, including in IP (Id, at paras. 242-43).

Even without action by the Commission, Verizon seems likely to continue offering its Wholesale Advantage service, stating that it was economical for it and its CLEC customers. However, AT&T may balk at continuing to provide its Local Service Complete. The carrier explained:

There is no lawful basis upon which the Commission could turn its interim requirements related to continuation of commercial wholesale platform services into long-term requirements because those services are neither Title II offerings nor interstate services. To the contrary, they are wholesale arrangements for local exchange capability that are offered on a private carriage basis (FCC Docket 13-5, AT&T Comments, filed October 26, 2015 at p. 18).

In response, Granite recently met with the FCC and requested the Commission to sever the requirement for wholesale network platform services from the establishment of BDS rules:

[T]he Commission should affirmatively “delink” the wholesale platform services remedy from the Business Data Services proceeding and retain the regulatory backstop for wholesale platform services until the Commission completes an examination of the relevant market for wholesale voice platform services. We expressed the view that we would not expect incumbent LECs, other than perhaps AT&T, to oppose this change. Finally, we explained that the appropriate conclusion of the proceeding concerning the wholesale voice platform would be to ensure that the incumbent LECs charge just, reasonable, and not unjustly or unreasonably discriminatory rates for those services to wholesale customers (FCC Docket 13-5, Granite Ex Parte letter, filed September 22, 2016 at p. 2).

Granite is correct. The FCC should never have tied wholesale platform services to dedicated services and should use the BDS Order to cut the connection. Going forward, there is little justification for the Commission to suddenly transform a commercial service such as the wholesale network platform into one that is required by law. However, this service is unlikely to suddenly be discontinued.

The wholesale platform services were offered by Verizon and AT&T on a commercial basis before the Technology Transitions Order made them mandatory because they made competitive sense to those carriers. The completion of the BDS proceeding should have no impact on the economic viability of this service.

To protect themselves, however, CLECs purchasing the wholesale network platform should meet with their providers to ensure the platform will continue to be offered on a commercial basis.  At the very least CLECs should make sure their current contract (which any FCC Order is unlikely to disturb) does not include a change of law provision. Keep in mind, the BDS Order is likely to be released before the end of 2016 with an early 2017 effective date.

By Andy Regitsky, CCMI