CLECs, Allies Urge FCC Not To Give ILECs Conduit Relief in USTelecom Bid

XO Communications said it understood the FCC is considering granting USTelecom’s request for forbearance relief from regulated sharing of “entrance conduits” for “greenfield, but not brownfield developments.” In meetings with FCC officials, XO representatives said the commission shouldn't provide such deregulation because USTelecom hadn't made the requisite showing under the forbearance provisions of Section 10 of the Communications Act, according to company filings in docket 14-192.

XO noted USTelecom arguments that ILECs have no special advantages over competitors in deploying new conduits; that the overall conduit imbalance between incumbents and rivals was narrowing; and required sharing discourages ILEC investment and deployment. “However, nowhere in the Petition does US Telecom provide data, affidavits, declarations, or analysis to support these broad assertions,” XO said. “Moreover, US Telecom provides no market-by-market analysis -- and, when it comes to network deployment, local market factors are critical. Each market presents unique challenges.” Competitor access to conduits depends on such local factors as rights-of-way permitting process, individual building owners and availability of construction crews, XO said. “Because US Telecom fails to provide these threshold, basic facts and analyze them, it has not met its statutory burden, and relief on access to entrance conduit cannot be granted."

XO said the FCC should also reject the USTelecom bid because competitors “have submitted evidence” that shows “ILECs continue to have numerous, material advantages in deploying new conduit, in both brownfield and greenfield developments.” Various factors “give ILECs, which have had a century to deploy ubiquitous infrastructure, tremendous advantages over new entrants, who are building their networks for the first time -- and may, for example, face unduly burdensome government permitting requirements or even building moratoria,” XO said. ILECs also benefit from “their pervasive and long-standing relationships with building owners and developers,” “large economies of scale” and “greater access to large amounts of capital than do competitors,” XO said, saying the same developers and building owners often make ILECs their default choice for service provider. “Because XO and other competitors do not yet have these relationships, lack the large scale and access to capital of the incumbents, and have much more limited networks, they have a far more difficult time justifying installation of entrance conduit even in a new development -- and access to ILEC conduit becomes critical if they are to deploy networks and compete,” it said.

“If the commission rejects the request, it isn’t as if it could be many, many years before the ILECs get relief," XO outside counsel Thomas Cohen told us Friday. "They control the timing of the forbearance process. All they need to do is come in with sufficient market evidence to warrant relief, and the commission is required to respond within a relatively short time."

The American Cable Association, Incompas, the Michigan Internet and Telecommunications Alliance and Public Knowledge also made filings that called on the FCC not to give ILECs conduit forbearance relief. Thursday was the last day for normal lobbying before the FCC’s Sunshine Act restrictions took effect. USTelecom and FCC spokespersons had no comment Friday.

USTelecom did lobby FCC officials in recent days in support of its forbearance petition. “We discussed the drag that the legacy obligations identified in the petition impose on the ability of incumbent LECs to invest in new and upgraded broadband networks that consumers and businesses want,” USTelecom said in a filing Thursday. “We explained that removing these obligations would allow incumbent LECs to better compete with cable and other networks and that this stronger competition would serve consumers and the public interest.” Verizon asked for relief from certain remaining Section 272 obligations.

Granite Telecom and other CLECs urged the FCC not to give the Bells relief from duties to provide wholesale access under Section 271 long-distance entry requirements. They also said ILECs should not be released from certain wholesale requirements to make a 64 kbps voice channel available when replacing copper with fiber network services. Access Point and others said regulated resale was not a viable general alternative to the wholesale regulatory duties because they use resale only “to fill in for services that are not available through a wholesale voice platform agreement because the discounts of approximately 12-20% available pursuant to Section 251(c)(4)” don’t allow CLECs to cover their costs. “Thus, CLECs lose money by using resale, which is acceptable if resold service is only a small fraction of the service a CLEC provides, but cannot support a business plan in the absence of a wholesale voice platform,” they said. The FCC draft order would give the Bells/ILECs the Section 271 and 64 kbps relief, a senior official has said.