Regulatory Fallujah: UNE showdown due Wednesday

While sex on television may get more headlines for the FCC, its more important work may be the most arcane: telephone regulation. But it’s not without drama–the Commission is scheduled to vote on its new, improved unbundled network element rules this Wednesday. All reports indicate the debates within the FCC are intense, and no one really knows what the final order will look like. The good news is that the rules will almost certainly be scaled back (as all but ordered by the D.C. Circuit).

But how much? Here the question gets fuzzy. On some important issues, the indications are not good. For example, the market for “high-capacity” loops is one of the most competitive in the industry–with Bells outpaced by CLECs in many areas, and even being challenged by cable companies. Yet rather than declare success and sweep controls away here, the commission is looking at rather timid relief. UNE requirements would not only be lifted in areas where the density of lines is enough to support competition, but where there is a certain number of actual facilities based competitors. The problem, of course, is that this could be a self-defeating prophecy, as the availability of cheap UNEs discourage others from putting facilities in those areas. Perhaps worse, the test could be applied on a builing-by-building area.

In other words, downtown areas would be examined building-by-building to see whether there are competitors lines coming in. This seems a recipe for a regulatory quagmire–with CLECs and LECs fighting over buildings one at a time at the FCC and in the courts over which has whose lines installed. One imagines platoons of FCC officials digging around in basements on the lookout for stray wires and telltale circuits.

Instead of this Fallujah approach, the FCC should lift UNEs in areas where competition has been shown to be economically possible–perhaps based on line density alone, then get out of the way.

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