FCC Releases 576-Page Triennial Review Order

Six months and one day after voting 3-to-2 to adopt a new set of network unbundling rules for incumbent local exchange carriers (ILECs), the FCC released the final rules for its Triennial Review Order. The 576-page document provides rules and regulations to clarify the Telecommunications Act of 1996 and address local phone and broadband competition issues, including previous Unbundled Network Elements (UNE) rules that had been overturned last year by the U.S. Court of Appeals.


Significantly, the order eliminates most unbundling requirements for broadband, with the goal of spurring investment in new networks. It also preserves local competition for switched voice services based on UNEs. A premise of the new FCC framework is that competition is taking place on an intermodal basis -- between wireline providers and providers of services on other networks, such as cable or wireless -- as well as on an intramodal basis between wireline providers.


Some key elements of the order:


Impairment Standard: Under the new rules, a competitive carrier will be considered "impaired" when lack of access to an ILEC network element poses a barrier or barriers to entry, including operational and economic barriers, which are likely to make entry into a market economically unfeasible. The order specifies the types of barriers that should be considered to meet the impairment standard in terms of scale economics, sunk costs, first-mover advantages, absolute cost advantages, and barriers within the control of an ILEC. The FCC will rely on state commissions to take on fact finding responsibilities to implement the statutory goals for certain network elements.


Mass Market Loops: ILECs must unbundle access to stand-alone copper loops and sub-loops for the provision of narrowband and broadband services. Subject to a grandfather provision and a transition period, ILECs do not have to provide unbundled access to the high frequency portion of their loops. ILECs must offer unbundled access to the TDM features of hybrid copper/fiber loops. Similarly, only in fiber loop overbuild situations where the ILEC chooses to retire existing copper loops must the ILEC offer unbundled access to those fiber loops for narrowband service only. ILECs do not have to offer access to greenfield fiber loops or to the packet-switching features of their hybrid loops.


Enterprise Market Loops: ILECs are no longer required to unbundle OCn loops. ILECs must offer unbundled access to dark fiber loops, DS3 loops (limited to 2 loops per requesting carrier per customer location) and DS1 loops except where states have found no impairment.


Subloops: ILECs must offer unbundled access to subloops where necessary to access wiring at or near a multi-tenant customer premise, including the inside wiring subloop of a building.


Network Interface Devices (NIDs): ILECs must offer unbundled network access to NIDs on a standalone basis to requesting carriers.


Dedicated Transport between LEC switches: the FCC finds that requesting carriers are not impaired without access to unbundled OCn transport, but that requesting carriers are impaired without access to dark fiber, DS3 and DS1 transport subject to a granular route-specific review.


Switching for the Enterprise Market (DS1 and up): the FCC finds that CLECs are not impaired without unbundled local circuit switching in the enterprise market. State commissions may rebut this finding based on their local situation.


Switching for Mass Market (DS0s): the FCC finds that CLECs are impaired without unbundled local circuit switching due to operational and economic barriers associated with the ILEC "hot cut" process. State commissions are required to approve an ILEC batch hot cut process or make a detailed finding that such a process is not necessary. The FCC also recognizes that in certain markets competitive impairment may no longer exist. State commissions are asked to apply FCC-defined triggers measuring existing switch deployments in the market. If the states find that there is a competitive impairment they must consider whether it can be cured by requiring unbundled switching on a rolling basis, rather than making unbundled switching available indefinitely.


Shared Transport: the FCC finds that CLECs are impaired without shared transport only to the extent that they are impaired without access to unbundled switching.


Packet Switching: ILECs are not required to unbundle packet switching, including routers and DSLAMs, as an unbundled network element. The order eliminates the current limited requirement for unbundling of packet switching.


Signaling Networks: ILECs are only required to offer unbundled access when a carrier is purchasing unbundled switching. The signaling network element, when available, includes, but is not limited to, signaling links and signaling transfer points (STPs).


Call-Related Databases: When a requesting carrier purchases unbundled access to the ILECs' switching, the ILEC must also offer unbundled access to their call-related databases. When a carrier utilizes its own switches, with the exception of 911 and E911 databases, ILECs are not required to offer unbundled access to call-related databases, including, but not limited to, the Line Information database (LIDB), Toll Free Calling database, Number Portability database, Calling Name (CNAM) database, Operator Services/Directory Assistance databases, and the Advanced Intelligent Network (AIN) database.


OSS Functions: ILECs must offer unbundled access to their operations support systems for qualifying services. OSS consists of pre-ordering, ordering, provisioning, maintenance and repair, and billing functions supported by an ILECs' databases and information. The OSS element also includes access to all loop qualification information contained in any of the ILECs' databases or other records.


TELRIC pricing: The order clarifies two key components of the TELRIC pricing rules to ensure UNE prices send appropriate economic signals to ILECs and CLECs. First, the order clarifies that the risk-adjusted cost of capital used in calculating UNE prices should reflect the risks associated with a competitive market. Second, the order declines to mandate the use of any particular set of asset lives for depreciation, but clarifies that the use of an accelerated depreciation mechanism may present a more accurate method.


Biennial Reviews: the FCC will adopt a biennial review process for these national unbundling rules.


The full 576-page Triennial Review Order is posted online.
http://www.fcc.gov