FCC Proposes to Further Curtail UNEs

The FCC voted on November 22 to issue a Notice of Proposed Rulemaking that will largely eliminate the use of unbundled network elements (UNEs) by competitors. This was a surprise order because there was not the usual chain of aggrieved parties on the record asking for the docket – it seems to be unprompted and generated by the FCC directly. It’s been well known for decades that the large telcos have wanted to get rid of UNEs and they likely have been pushing for this behind the scenes and off the record.

UNEs are portions of the telcos copper and dark fiber networks that have been made available to competitors since the Telecommunications Act of 1996. There are two primary uses of UNEs today. First, competitors buy a copper UNE and deliver better DSL than the telcos using modern DSL technology. I know of cases where competitors are offering several hundred Mbps speeds to businesses by bonding multiple UNEs. Like every product that competes with cable broadband, the use of DSL UNEs has been declining, but there must still be hundreds of thousands, if not a few million homes and businesses in the country served by newer DSL technology on UNEs.

UNEs are also used by competitors to interconnect to the big telco networks. There was a movement a decade ago by the FCC to transition the telecom network to all-digital – but that never happened. Competitive carriers must buy still buy traditional T1 and T3 UNEs (28 T1s) to interface with the big telco networks. CLECs (Competitive Local Exchange Carriers) that offer voice services use these UNEs to connect to the public switched telephone network. I doubt the FCC understands the extent to which such connections are required by the big telcos – and the extent that there might not be alternatives available to CLECs. Eliminating these UNEs is particularly puzzling since the upcoming RDOF grants will require all grant recipients to offer voice services – it would be ironic if grant recipients are unable to connect voice from these new networks to the rest of the world.

This proposed order will eliminate the following kinds of UNEs:

  • DS1 (single lines) and DS3 (T1s) loops in counties previously deemed competitive by the FCC. The exception is that DS1 single line loops will still be available in rural areas – presumably using the flawed FCC maps that define areas without broadband. In North Carolina where I live, this would eliminate UNEs in 67 of the 100 counties. I’m familiar with many of the counties on the list and I think the folks in many of these counties like Moore and Stanley will be surprised to find that they are considered as competitive.
  • DS0 loops in urban census blocks. These loops are also used to provide DSL.
  • Subloops in the same areas that eliminate other kinds of loops. Subloops are connections to homes inside a subdivision if that subdivision is served by telco DSL from the entrance to the subdivision.
  • Dark fiber transport in wire centers within a half-mile of alternative fiber. Unless ‘alternative fiber’ is defined carefully, this could eliminate dark fiber when there is no actual alternative.

The NPRM would require a 3-year transition for anybody using the UNEs. I’m not sure what transition means since a carrier can either use a UNE or they can’t. It seems this would give competitors three more years to continue to serve customers before they lose the UNE connection.

The FCC is painting the NPRM as part of its ongoing effort to eliminate unneeded regulations. However, UNEs are not unneeded – there are competitive carriers using UNEs to deliver products that customers want to buy. This FCC has always said that the main thrust of eliminating regulations is to increase competition. This particular order will decrease broadband competition and will force a lot of customers to find a more costly broadband alternative. The FCC should not be actively trying to eliminate UNEs if homes are happy with 25 Mbps or 50 Mbps broadband delivered on copper UNEs.

The big telcos have been trying to eliminate the requirement to unbundle their network since the 1996 Act. The FCC eliminated some UNE requirements earlier this year, and in that docket, the FCC said they didn’t eliminate broadband UNEs because the market still valued them. Now, barely half a year later, the FCC has done an about-face and wants to throw DSL competitors out of urban and suburban markets.

It’s also an odd order from a financial perspective. The big telcos will lose the revenues if UNEs disappear – they are a significant source of revenue on old copper. Customers will be tossed off services they like. The real beneficiaries of the order are the cable companies that will pick up the displaced customers – which is an odd thing for the FCC to be pushing when the cable companies are inching towards monopoly.

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