It has now been almost 18 months since the FCC began a proceeding (Docket 15-1) in response to Windstream’s Petition requesting a ruling that an ILEC’s obligation to provide DS1 and DS3 unbundled loops as required by section 251(c)(3) of the 1996 Telecommunications Act is not changed or eliminated by the replacement of copper with fiber facilities or by the conversion from the Time Division Multiplexed (TDM) network to one using Internet protocol (IP). 

So far the Commission has chosen to sit on the Petition. Remarkably, the agency is currently in the process of developing new regulations for the business data services (BDS) market, including the classification of markets into competitive or non-competitive to create new rules for special access and Ethernet services. But how can it determine if a market is competitive if the market participants have no idea what service alternatives are available? It is high time for the Commission to act on this issue and end the continued uncertainty for both ILECs and CLECs.

The industry is well aware of the importance of this issue. CenturyLink has led the ILEC charge in arguing against the continued availability of unbundled loops. In a recent FCC filing it noted:

[T]he very small proportion of the overall marketplace attributable to these facilities…[B]y next year, DS1 and Dedicated Internet Access services combined will account for only three percent of the broadband marketplace for small and medium businesses, the market that is the focus of Windstream’s concern. Moreover, DSn equipment manufacturers have begun to discontinue the facilities used to provide these archaic services. That is, the reason why ILECs are migrating away from legacy DSn-capacity loops is not simply that they have found next-generation means by which to satisfy legacy demand, but that demand itself is shifting. This shift in demand is further promoting the shift to Ethernet and other technologies, as well as expanded reliance on non-ILEC alternatives, including cable and fixed wireless.

Under circumstances in which Windstream, ILECs, cable providers, and many others are racing to replace TDM networks with fiber and other successor technologies, a backward-looking requirement that ILECs retrofit next-generation loops to provide unbundled DSn capacity service would be senseless and contrary to public policy, as the Commission recognized more than 12 years ago when it sharply curtailed unbundled access to fiber loops (CenturyLink ex parte letter, filed April 21, 2016 at pp. 4-5).

In response, Windstream correctly points out the weakness in CenturyLink’s argument.  The ILEC fails to explain why the language in section 251(c)(3) should no longer apply under the newer technology:

CenturyLink’s letter reiterates points about broad trends related to “the broadband marketplace,” “DSN equipment manufacturers,” “the shift to Ethernet,” and the replacement of “TDM networks with fiber.” None of these observations bears on the core arguments raised in Windstream’s petition: that the Commission’s regulations set forth technology-neutral unbundling obligations that are unaffected by the transition from TDM to IP or the use of copper versus fiber (legacy or new) and that unbundled DS1 and DS3 capacity loops remain important inputs for competitive providers that help discipline incumbent LEC monopoly pricing. CenturyLink also repeats the incorrect assertion made by the incumbent LECs that continued application of the Commission’s unbundling rules requires “that ILECs retrofit next-generation loops.”  As Windstream has explained, granting its petition only means that the incumbent LEC would need to continue to provide DS1 and DS3 capacity, at current prices, absent forbearance or a finding of non-impairment. The format of that capacity is left to the incumbent LEC’s discretion (Windstream ex parte letter, filed April 21, 2016 at pp. 5-6).

In its Further Notice of Proposed Rulemaking (FNPRM) the Commission makes the development of technology neutral rules for the BDS market one of its chief goals.  If that is the case, it makes little sense to require unbundled loops with a single technology only. The FCC should quickly approve Windstream’s Petition.

By Andy Regitsky, CCMI