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September 15, 1999

PRESS STATEMENT OF COMMISSIONER MICHAEL K. POWELL, DISSENTING IN PART

Re: Third Report and Order and Fourth Further Notice of Proposed Rulemaking, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996 (CC Docket No. 96-98)

As I have tried to impress on many occasions,(1) the Supreme Court gave us a tall order in AT&T Corp. v. Iowa Utilities Bd.(2) The Court rejected the previous Commission's decision to provide competitive carriers with unbridled access to every element of the incumbent's network at steeply discounted, cost-based prices. In particular, the Court rejected the previous Commission's presumption in favor of unbundling the entire incumbent network, subject to potential exclusions that, in any event, never materialized.(3) That approach, the Court admonished, gave no effect to the limiting "necessary" and "impair" standards of section 251(d)(2). In place of this presumption, the Court ordered the Commission to surmount a high factual hurdle: the burden of demonstrating that each network element is unbundled only to the extent that, without it, competitive local exchange carriers (CLECs) would be impaired from providing service.(4)

I sincerely applaud my colleagues for the steps they have taken to consider the availability of switching outside the incumbent's network, including self-provisioning. It is on the basis of many of these steps that I am able to support much of the decision in this area. For my part, however, I do not believe the Commission has met its burden of showing that failure to unbundle switching would impair CLECs from providing service in the densest areas of the largest markets. Thus, I would have been prepared to leave switching off the unbundling list for the provision of service to all customers in access Zone 1, regardless of their size or type, and regardless of whether the incumbent is providing the "extended link" or EEL.

As the record amply demonstrates, the vast majority of CLEC switches are concentrated in these zones,(5) amounting to multiple companies providing switch-based alternative service in the market. The tele-density in these zones, moreover, suggests that if CLECs truly wish to, they could take advantage of opportunities to serve relatively many residential customers per square mile, which would make residential customers in these zones easier and cheaper to serve, particularly in multiple dwelling units (MDUs). In addition, in light of the existence of special access and our related decisions today regarding loop and transport, CLECs can potentially serve many residential and other customers even beyond Zone 1. Based on the evidence of significant CLEC deployment and the comments of many CLECs that currently use their own switches, I am unpersuaded that CLECs would be materially impaired if they could not obtain unbundled switching in Zone 1.(6)

With respect to the EEL, I am certainly persuaded that this functionality (which allows transmission from the CLEC's switch to its customers via the incumbent's facilities) will make it easier for CLECs to provide service. But the question the Court has mandated that we answer is not whether access to parts of the incumbent's network makes it easier for CLECs but whether denial of such access would "impair" CLECs' ability to provide service within the meaning of section 251(d)(2).(7) If parts of the incumbent network satisfy this standard, then the Act requires that we make them available. What our decision today does is to muddy an already complicated analysis. On the one hand, we insist that we cannot mandate the EEL pending the Eighth Circuit's resolution of the appeal of our authority to require combinations of elements. On the other hand, in the face of repeated and well-documented incumbent requests to remove switching as an unbundled element, we provide strong and direct incentives to incumbents to provide the EEL as a condition of such removal. To make matters worse, we do so even though we also conclude that our existing rules permit CLECs to obtain the same functionality as the EEL, at least in many circumstances, by simply converting special access services to network elements. I think the cleaner approach would have been either to wait for the Eighth Circuit's combination ruling or simply decide whether the EEL should be made available as its own network element.

Having said all that, I do generally support most of the remainder of the item, and I commend my colleagues and the Common Carrier Bureau for their diligence and hard work in working through these issues. Despite my misgivings about a few of the bottom lines, I fully recognize that an enormous amount of blood, sweat and tears have gone into the decisions we reach here. (I have cried some of these tears myself.) The Bureau, in particular, is to be commended for bringing us this far in our efforts to grapple with the voluminous and highly-complex record that the parties have developed in this docket.



1. See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98, Second Further Notice of Proposed Rulemaking, FCC 99-70 (rel. Apr. 16, 1999) (statement of Commissioner Powell, dissenting in part).

2. See AT&T Corp. et al. v. Iowa Utils. Bd. et al., 119 S. Ct. 721 (1999).

3. Id. at 736 (holding Commission erroneously perceived a general obligation to unbundle that it could soften by "regulatory grace"). As the Supreme Court indicated, the previous Commission provided "blanket access" virtually all significant elements of the incumbent's network. Id. at 735.

4. See cf. 119 S. Ct. 721, 736 ("Section 251(d)(2) does not authorize the Commission to create isolated exemptions from some underlying duty to make all network elements available. It requires the Commission to determine on a rational basis which network elements must be made available, taking into account the objectives of the Act and giving some substance to the 'necessary' and "impair' requirements.").

5. See, e.g., BellSouth Comments at 59.

6. I should add, however, that my belief that declining to unbundle switching in Zone 1 would address many, but not all, of my concerns regarding geographic variations and the impact of those variations on our impairment analysis. By using a broad national approach based on highly-disputed generalities, I still fear that the Commission has failed to pay adequate attention to the Court's instruction that we assess the availability of elements outside the incumbent's network, including self-provisioning. A preferable option would have been to provide some time-limited ability for state commissions that perceive their markets are different to remove elements from the national list, based on a showing consistent with this decision and our existing rules. This authority was advocated by the vast majority of state commenters in this docket. See, e.g., Washington Utilities & Transportation Commission Comments at 2, California Public Utilities Commission Comments at 7, and New York Department of Public Service Comments at 5.

7. See 47 U.S.C. 251(d)(2)(B).