We are in the home stretch of the FCC’s review of the 2018 USTelecom Petition in Docket 18-141 seeking forbearance from the 1996 Telecom Act’s unbundled network elements (UNE) and Total Service Resale (TSR) requirements. The Commission must make a final decision by August 2, 2019.

And while the ILEC association requested nationwide relief of the section 251(c)(3) and (4) obligations, we never believed it made the case for a blanket nationwide removal of the obligations to provide UNEs at prices based on the long-run incremental costs or resold services at prices with avoided costs removed. Instead, we expect the Commission to rely on a market-by-market analysis like the one it used in the Business Data Services (BDS) Order in which it removed regulations for ILEC DS1 and DS3 special access services only in counties in which they faced competition.

In its discussions with the FCC, USTelecom must have reached a similar conclusion. In a May 10, 2019 ex parte filing to the FCC, it again requested nationwide forbearance, but urged the Commission that if that was not realistic, to grant at minimum, forbearance of the:

• Unbundling requirements for DS1 and DS3 loops in (a) census blocks featuring competition from a cable provider offering service at speeds of at least 25 Mbps downstream and 3 Mbps upstream or (b) counties that have already been deemed competitive by the Commission in the Broadband Data Services (“BDS”) proceeding;
• Unbundling requirements for digital DS0 loops in census blocks featuring competition from a cable provider offering service at speeds of at least 25 Mbps downstream and 3 Mbps upstream;
• Unbundling requirements for analog DS0 loops nationwide;
• Unbundling requirements for transport with demonstrable evidence of competition; and
• 251(c)(4) resale obligations nationwide.

According to USTelecom:

This approach would recognize that, given extensive retail voice competition, there is no basis for continued unbundling of analog loops or resale, which are used by CLECs almost exclusively to provision voice services. It also would recognize that, where cable operators are providing robust broadband in competition with the ILEC, there is no basis for requiring the unbundling of DS1 or DS3 loops, or of digital DS0 loops, because retail customers have options for obtaining high-capacity services from at least two providers relying on distinct networks. (USTelecom May 10, 2019 Letter, Docket 18-141, at p. 2).

USTelecom also attempts the novel argument that a Commission refusal to grant ILECs forbearance from unbundling loops in census blocks served by a cable competitor would be inconsistent with the policy of prohibiting the availability of universal service support in areas served by an unsubsidized competitor, such as a cable company based on data in Form 477.

According to the association, the Commission consistently has taken the view that competitors in a census block should not receive universal service if a cable company is already providing service.

A “core objective” of the Commission has been to “ensure that we do not provide support to overbuild unsubsidized competitors that are offering voice and broadband services meeting the Commission’s requirements.” The Commission thus has found that the presence of a single cable competitor is sufficient to justify a lack of government support in such areas. The same rationale and the same FCC Form 477 data militates against the continued imposition of unbundling and 251(c)(4) resale requirements in the same locations. If the public interest is not served by subsidizing competition in such areas on the back of ratepayers via the Universal Service Fund, then the public interest is also not served by subsidizing competition on the back of ILECs in the same rural areas subject to the same cable competition. (Id.).

Frankly, we don’t buy this. While we believe that many larger markets may have enough competition to control prices and provide customers with a multitude of choices, rural markets remain a different animal. In those markets we are completely in tune with the recent sentiments of INCOMPAS.

Competitive carriers are using unbundled network elements to provide service to consumers and to areas of the country the large carriers often ignore, and transforming these communities by bringing innovative, better quality of service in their wake. Nearly ten thousand residential and business consumers from various industries, especially small businesses, have expressed concern with the impact forbearance would have on their operations and their ability to grow in their respective marketplaces, noting the faster speed, better quality of service, more affordability, and a willingness to accommodate the unique needs of growing businesses offered by competitors. (INCOMPAS May 14, 2019 Letter, Docket 18-141, pp. 1-2.).

The Commission should reject the USTelecom Petition. Forbearance is justified only in the largest markets where there is real competition.