Eliminating Unbundled Network Elements (UNEs)

At the urging of USTelecom, the lobbying arm for the big telcos, the FCC has opened WC Docket No. 18-141 that is seeking to eliminate the requirement for the big telcos to offer unbundled network elements (UNEs) or resale for their products. Comments are due in this docket by June 7, with reply comments due June 22.

The requirement for the big telcos to unbundle their networks was one of the primary features of the Telecommunications Act of 1996. The Congress at that time recognized that there was little competition in the telecom market and decided that allowing competitors to resell or use components of the big telco networks would help to jump-start competition. The idea worked and within just a few years there were giant CLECs created that used resale and UNEs to create large competitive telecoms. I recall that at least six different CLECs salespeople visiting the CCG offices located just inside the Washington DC Beltway. Most of those big competitive companies imploded spectacularly in the big telecom collapse in 2000, but there are still numerous companies utilizing the unbundled elements of the big telco networks.

The docket talks about forbearance, which in this case means ceasing a regulatory requirement, and specifically this docket asks the FCC to forbear:

  • Section 251 and 252 of the FCC rules that require the big telcos to resale or offer unbundled network elements to competitors;
  • Section 272 of the FCC’s rules that specify timelines for the telcos to negotiate or respond to requests for service from competitors;
  • Section 271 of the FCC’s rules that lay out the rights for competitors to gain access to poles, ducts, conduits and rights-of-way.

This forbearance would be devastating to a number of competitive carriers. Consider just a few examples of how the industry still uses these sections of the FCC’s rules:

  • There is still a lot of resale of telco products. I know one Northwest rural area where a competitor resells nearly 90% of the rural DSL provided by CenturyLink. This reseller gained the business by knocking on doors and selling DSL to homes that didn’t even know it was available from the telco. In much of rural America the big telcos have almost no employees, no marketing and no customer service and resellers are making big telco products work even where the telcos don’t make any effort.
  • There are still numerous DSL providers that collocate their own DSL electronics in telco central offices and then use the unbundled telco loops to provide decent DSL to customers. These competitors offer newer generation and faster DSL where the telcos are often still only offering slow first generation DSL from twenty years ago.
  • Facility-based fiber overbuilders regularly use unbundled network elements to operate in areas where they have not yet built fiber. Or they use UNEs to serve distant branches of a fiber customer – for instance they might use UNEs to create a private network between locations of a bank with branches in several communities.
  • Any competitor that wants to offer facility-based long distance in a metropolitan market must have a physical connection to the primary big telco switching locations (tandems) in that market. These connections are needed due to requirements that the telcos have forced upon competitors since the 1996 Act to try to make it more expensive to compete. Nobody would build the massive network needed to connect these office just to provide voice and so competitors satisfy this requirement using UNEs.
  • Competitors routinely want to make connections between carriers located at the big telco hubs. They make this happen by buying UNEs that reach between carrier A and B within these hubs (might only require a few feet of fiber).

All of these situation, and the many other uses of the resale and UNEs would disappear if the FCC sides with the big telcos. The big telcos set to work to neuter the requirements of the Telecommunications Act of 1996 right after it passed. Over the years they have eliminated many forms of resale. They have made it virtually impossible for a competitor to gain access to their dark fiber. They have routinely made it harder and harder each year for competitors by introducing changes in their contracts with competitors.

This forbearance would be a huge victory for the telcos. This would have a huge chilling impact on competition and customer choice. This would mean that the only way to compete with the telcos would be by overbuilding 100% to reach customers and to interconnect networks. Numerous competitive providers would be quickly bankrupted and disappear. Huge numbers of customers, primarily businesses, would lose their vendor of choice as competitive carriers would no longer be able to serve them. This could even kill wholesale VoIP since the underlying carriers providing that service rely heavily within their networks on interconnection UNEs.

The big telcos argue that they shouldn’t have to continue to unbundle their networks because these requirements deal mostly with legacy TDM technology. But this is not only copper technology and many of the UNEs used for interconnection are on fiber. And even where this is being done on copper, it makes sense for the FCC to allow competitors to use that copper for as long as it exists. Copper UNEs will die a natural death as the copper disappears, but until then, if a competitor can use that copper better than the telco they should be allowed to do so. Competitors have used UNEs and resale to build thriving businesses that benefit consumers by providing choice and lower prices. Forbearing on resale and UNEs would be another giveaway by the FCC to the big telcos at the expense of competition and customer choice.

If you are a small carrier that relies on resale or UNEs you need to file comments in this docket by June 7. They need to hear real life stories of small carriers and the customers you serve, and hear why they should not kill UNEs. You don’t need to be a lawyer to tell the FCC your story, especially not if you have a good story to tell.

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