The FCC ended 2015 by issuing a Memorandum Opinion and Order (MO&O) on a Petition filed by USTelecom in 2014 in Docket 14-192. The Petition sought forbearance from certain rules applicable to ILECs which it claimed were outdated and whose costs far exceeded any industry benefits. The Commission granted much of the relief USTelecom requested. 

Here are the key areas in which USTelecom sought forbearance and the Commission’s response:

Section 271 Checklist – After the AT&T divestiture, the Bell Operating Companies (BOCs) were prohibited from providing in-region long-distance service without FCC approval. To receive such authorization, a BOC had to (1) demonstrate that it satisfied as part of section 271 of the Commission rules, a fourteen-point competitive checklist which enabled competitors to enter the local market; (2) demonstrate that such authorization was in the public interest; and, (3) carry out its in-region long-distance operations through a separate affiliate in accordance with section 272.  

After a BOC obtained section 271 authority to offer in-region long-distance service, these requirements became ongoing, subject to a complaint and enforcement process under section 271(d)(6).51. In its Petition, USTelecom requested forbearance from many of the checklist items.

The Commission concluded that it should forbear from enforcing checklist items mandating access to unbundled network elements, directory listings, white pages, numbering, number portability, local dialing parity, reciprocal compensation, and resale which establish interconnection and access obligations. It did so because these requirements reference similar section 251 requirements.

However, the Commission denied USTelecom’s request for forbearance from enforcement of the item which requires BOCs to provide nondiscriminatory access to poles, ducts, conduit, and rights-of-way in accordance with the requirements of section 224 of the Act. These requirements continue to be necessary to maintain facilities-based competition since they provide continued access to LEC infrastructure for all providers. 

USTelecom also sought forbearance from the obligation to comply with checklist items that do not reference section 251 requirements. These items include access to local loops, local transport, local switching, and access to databases.

The Commission agreed, finding there is no evidence in the record that CLECs are providing local service through unbundled loops, transport, or databases and signaling that are available under the section 271 competitive checklist. 

 Although these checklist items do not specifically reference section 251, that section provides access to unbundled network elements and is frequently utilized by CLECs. Therefore, forbearance of the section 271 requirements is warranted. 

Section 272 – As noted above, a BOC authorized under section 271 to provide in-region long distance service must comply with section 272. This section requires BOCs to provide long distance service through a separate affiliate. However, since 2006, this requirement has sunset for all BOCs in all regions.  According to the FCC:

The only remaining section 272 requirements are those of subsection (e), which govern BOCs’ treatment of unaffiliated providers that seek access to their local networks. Section 272(e)(1) directs a BOC to “fulfill any requests from an unaffiliated entity” for such access “within a period no longer than the period in which it provides” such access to itself.  BOCs must also report to the Commission quarterly on performance metrics related to their “order taking, provisioning, and maintenance and repair” of DS0, DS1, DS3, and OCn special access services.  Section 272(e)(3) requires a BOC to impute to itself an amount for access to its local network “that is no less than the amount charged to any unaffiliated interexchange carriers for such service.” BOCs are also subject to additional imputation obligations, including the requirement that they impute to themselves their “highest tariffed rate for access, including access provided over joint-use facilities  (MO&O at para. 39)."

USTelecom claims that the Commission should forbear from enforcing the remaining section 272 obligations since they address the provision of stand-alone long distance service, and the decline of this service and the rise of inter-modal competition has eliminated the need for these safeguards. 

However, the Commission declined forbearance because these obligations provide safeguards that protect subscribers to BOC services against the potential risk of having to pay costs incurred by the BOCs to provide long distance services, and protect competition in those markets from the BOCs’ ability to use any existing market power in local exchange services to obtain an anticompetitive advantage.

Equal Access - Equal access requirements originally ensured that stand-alone long distance service providers received exchange access equivalent to that available to the ILECs’ long distance offerings.  Equal access includes the nondiscriminatory provision of exchange access services, dialing parity, and presubscription of interexchange carriers.

The Commission agreed with USTelecom, that enforcement of the equal access provisions is no longer needed. The stand-alone long distance market has drastically changed since the equal access requirements were established. Today, customers for wireline voice services have many more choices that did not exist when the equal access requirements were established, making these requirements redundant.

Unbundling of 64 Kbps Narrowband Voice Channels in Fiber Loop Overbuilds

USTelecom requested forbearance from  section 51.319(a)(3)(iii)(C) of the Commission’s rules, which require unbundling of a 64 kbps voice-grade channel to provide narrowband services over fiber where an ILEC retires a copper loop it has overbuilt with a fiber-to-the-home or fiber-to-the-curb loop.

According to the Commission, the record indicates that the 64 kbps unbundling requirement imposes a burden on fiber deployment that is disproportionate to the very limited and decreasingly relevant purpose the requirement serves. Thus, it grants forbearance from this requirement, subject to a narrow, targeted grandfathering condition that ILECs must continue to provide access to unbundled 64 kbps channels that are already in use.

Prohibition against Using Contract Tariffs for Business Data Services

USTelecom requested that price cap ILECs be allowed to offer business data services via contract tariffs in all price cap service territories not already subject to Phase I or II pricing flexibility without making the established competitive showings the Commission has applied in the past. Remarkably it sought such permission while new grants of pricing flexibility are suspended while the Commission conducts its special access investigation

As expected, the Commission concluded that USTelecom failed to meet the requirements for forbearance because it has not demonstrated that enforcement of the Phase I pricing flexibility rules is no longer necessary to ensure just and reasonable rates and nondiscriminatory charges and practices.

As with every Commission Order these days, the current one was only partially supported by the two Republican commissioners. They fear the FCC will only forbear from provisions that are duplicates of other Commission rules.  For example, Commissioner O’Rielly stated:

The Commission proves once again that it is only willing to forbear when other statutory provisions remain in place that can allegedly accomplish the same objectives or unless there is no evidence that any competitor is actually benefiting from a provision. For example, on section 271, the Commission grants relief from checklist items that duplicate requirements mandated under section 251, grants relief from checklist items that nobody is using, but denies relief from a checklist item that is not fully duplicated by another provision… If the standard, found nowhere in the statute, is that every provision from which forbearance is sought must be “wholly replicated” by another provision or rule, then the forbearance process has truly become a farce. How is that relief? It doesn’t sufficiently reduce any burden; it just allows for a quick and misleading nod in a vaguely deregulatory direction. In other words, it’s a mixture of obfuscation and indignation to our true responsibility.  (Id., Statement of Commissioner Michael O’Rielly, Approving In Part and Dissenting In Part).

If the Commission cannot get full agreement for an Order such as this, which should be utterly uncontroversial, it does not bode well for the more contentious proceedings to come in 2016.

By Andy Regitsky, CCMI