On May 4, 2018, USTelecom filed a Petition for Forbearance (Petition) requesting the FCC to end ILEC network unbundling and wholesale resale obligations required under sections 251(c)(3) and (4) of the 1996 Telecommunications Act (Act).  Section 10 of the Act gives the Commission the authority to forbear from enforcing provisions it believes are no longer necessary in today’s telecommunications industry.

In its Petition, USTelecom argued that the industry has completely changed since 1996, and the Section 10 requirements for sections 251(c)(3) and (4) have been satisfied. 

Section 10's forbearance criteria are easily met with regard to Section 251(c)'s unbundling and resale provisions and associated obligations. Because of robust intermodal competition, the marketplace is irrevocably open to competition, such that these obligations are no longer necessary to ensure that rates and practices are just, reasonable, and nondiscriminatory, or to protect consumers. Moreover, forbearance furthers the public interest by encouraging facilities-based competition, reducing compliance costs, and freeing capital for use in deploying broadband networks and advanced services to consumers. (USTelecom Petition for Forbearance, filed May 4, 2018, Summary).

When the Petition was filed, the FCC opened Docket 18-141 to enable the industry to provide its input regarding the Petition.  Not surprisingly, most of the industry—especially UNE and resale customers—opposed USTelecom’s request, arguing that the section 251 requirements continue to be needed in many areas of the country, since, without them there would be no meaningful competition to the ILECs in rural areas.

So far, the FCC has punted on deciding how to handle the section 251(c)(3) forbearance request.  By law, the Commission must issue an order by August 2, 2019.

What's received far less publicity is the fact that in its Petition, USTelecom also requested the Commission to forbear from enforcing certain other regulations, ones that were established to protect competition more than 20 years ago.  The Commission has responded to this request, and in an Order that will be voted on at its April 12, 2019 meeting, the Commission will eliminate some of these requirements.

In this Order, the Commission would exercise that authority to grant relief from certain requirements that were first established more than two decades ago—in the early days of Bell Operating Company (BOC) entry into the long-distance telephone service market. At the time, Congress and the Commission had concerns about the ability of BOCs and other incumbent carriers to leverage their monopolies in the local telephone service market to dominate the long-distance market. Since then, the communications marketplace has undergone drastic transformation, and these requirements have outlived their usefulness.  This Order would therefore grant relief from these requirements and continue the Commission’s efforts to eliminate unnecessary, outdated, and burdensome regulations that divert carrier resources away from deploying next-generation networks and services to American consumers.  (Docket 18-141), Fact Sheet, March 21, 2019.

The Commission will now:

• Forbear from enforcing the burdensome requirement that independent rate-of-return carriers maintain a separate affiliate to provide in-region long-distance service. 
• Forbear from enforcing unnecessary nondiscriminatory provisioning interval requirements, namely Section 272(e)(1) of the Act and related special access performance metric reporting obligations.
• Forbear from enforcing the requirement in Section 271(c) of the Act that BOCs provide nondiscriminatory access to poles, ducts, conduits, and rights-of-way because this requirement is redundant of the obligations set forth in Section 224 of the Act.

There should be little controversy regarding these steps taken by the Commission, especially since carriers compete in all markets and the difference between the local and long-distance calls are nearly invisible to customers.  The real action will come when the Commission decides whether to forbear from the ILEC UNE and resale obligations.  

The simple truth is that USTelecom has not demonstrated that section 251(c)(3) forbearance is justified in the entire country.  Carriers can compete in certain markets using their own facilities, especially the major cities.  However, even in 2019 it is not economically possible for competitors to match ILEC facilities in some suburban and most rural areas.  

If UNEs, and to a lesser extent resale, are the vehicles for CLECs to first establish a market presence and then build facilities as these requirements were originally established to do, then they are still needed.  If CLECs cannot build facilities, there will never be meaningful broadband competition in much of the country. Thus, the FCC ought to think carefully before forbearing from enforcing the section 251 obligations in rural and suburban markets.