Bells, USTelecom Attack Granite UNE Petition That's Backed by CLECs

The Telecom Act gave CLECs the right to lease ILEC unbundled network elements -- e.g., local loops, switching and inter-office transport -- at "cost-based" wholesale discounts under Section 251, and imposed further UNE obligations on the Bells as a condition for long-distance entry under Section 271. But Granite, a CLEC with business customers, said a court-driven FCC rollback in ILEC Section 251 UNE duties, the absence of Section 271 UNE rules, and a recent USTelecom filing -- asserting the Bells don't have to combine Section 271 UNEs -- created uncertainty regarding Bells' Section 271 obligations. Citing Section 202(a) and 201(b) prohibitions against unreasonable discrimination and unjust and unreasonable practices, Granite asked the FCC to issue a declaratory ruling (1) to prevent the Bells from separating already-combined UNEs; (2) to require the Bells to combine Section 271 UNEs at the request of CLECs; and (3) to ensure CLECs can commingle Bell Section 271 UNEs with wholesale services -- unless the Bells have a reasonable basis for not complying.

Bell/ILEC parties said Granite's petition was contrary to precedent and made no policy sense. USTelecom disputed that its comments on its forbearance petition, seeking Bell relief from Section 271 duties, created uncertainty. "Rather, Granite appears to be asking the Commission to create leverage for competitors to use in negotiations with [the Bells] that would effectively require [the Bells] to recreate the UNE Platform (UNE-P) or provide similar regulated offerings upon request," USTelecom said. It said Granite was "asking the FCC to put its thumb on the scale by empowering Granite to invoke sections 201 and 202 whenever it is unhappy in negotiations." USTelecom and others cited an FCC order that expressly declined to require the Bells to combine network elements under Section 271 that were no longer required under Section 251 or to require commingling of Section 271 elements with other services. Despite this, USTelecom said, the Bells were often voluntarily combining UNEs and commingling services.

Verizon agreed the FCC should deny Granite's attempt to "resurrect UNE-P," which the agency eliminated "because it discouraged investment in facilities-based competition and because CLECs can deploy their own switching." Section 271 never required the Bells to bundle switching with transport elements after UNE-P was scrapped, Verizon said, citing FCC orders and a 2006 amicus brief to the 6th U.S. Circuit Court of Appeals. If anything, Verizon said, market dynamics made regulated UNE-P "even more unnecessary" as cable/VoIP competition blossomed while ILECs' number of voice lines (including for VoIP) fell to 43 percent of what they served in 2000. "There is no lawful rationale for the Commission to ignore its precedent and use Sections 201 and 202 to bring regulated UNE-P back from the dead," Verizon said.

CenturyLink said Granite could point to no instances of a Bell misconduct. It said it had voluntarily combined UNEs for Granite and others on a commercial basis "because it makes business sense" -- not because Section 271 provides a regulatory backstop. It's "baffling why Granite believes that the Commission should waste its limited resources on such an unnecessary issue -- an issue that becomes less relevant each day as additional customers migrate away from TDM voice services," CenturyLink said.

AT&T said long-distance service had been replaced by "all-distance services offered over a plethora of competing platforms." Despite the "cataclysmic changes," AT&T said, ILECs "continue to face anachronistic and burdensome wholesale obligations" under Section 251. "It is long past time for the Commission to revisit its impairment analysis and to put to bed many if not all of these requirements," AT&T said. "Regardless, there is absolutely no reason why [the Bells] should remain subject to section 271 unbundling, let alone the expanded section 271 requirements sought by Granite." AT&T said the FCC should reject Granite's petition and grant USTelecom’s petition for forbearance from Section 271 duties. AT&T also raised procedural objections, saying even if the FCC wanted to expand Section 271 obligations, it would have to do so through proper notice and comment in a rulemaking.

Comptel said Section 271 contained the only remaining Bell duties to provide CLECs access to unbundled local switching and shared transport. "Competitive carriers such as Access Point, Birch, Granite, and MetTel have relied on combined packages of unbundled [voice-grade] loops, switching, and shared transport to bring competitive choice to hundreds of thousands of business customer locations across America," such as "retail chains, fast food restaurants, convenience stores and gas stations" Comptel said. The FCC has ample authority under Sections 201 and 202 as well as policy reasons to grant Granite's petition, Comptel said. The FCC never said the Bells have no statutory duty to combine or not separate Section 271 network elements, Comptel said; the commission "merely held that Section 271 does not require [the Bells] to combine Section 271 network elements." Comptel said the same policy basis for rules governing the combination and separation of Section 251 UNEs applies to Section 271 network elements.

ACN Communications backed Granite, saying it was "uneconomical" to build last-mile facilities for residential customers. Even where cable competes with ILECs for residential voice service, the result will be a duopoly if ACN and other CLECs aren't able to reasonably access ILEC networks, ACN said.

Granite also received support from a group calling itself the Wholesale Voice Line Coalition, comprised of Access Point, BullsEye Telecom, Granite, Impact Telecom, New Horizon Communications, TelePacific Communications and Xchange Telecom. Members use voice-grade ILEC products to serve widely dispersed multi-location businesses "that have relatively modest needs for voice communications at each location (most frequently 1-10 lines)," the group said. Granite's proposed declaratory ruling was needed "to ensure that ILECs do not use the [IP] technology transition as a pretext for evading their wholesale obligations," it said.