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Global Telecommunications Regulation TCOM 5173. The Telecommunications Act of 1996 Outstanding Issues-Role of the States 20 February 2000 (Originally Scheduled for 18 February) Charles G. Gray. FCC Implementing Orders (1). Video programming accessibility Telecommunications Development Fund

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Global Telecommunications Regulation TCOM 5173

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Global Telecommunications RegulationTCOM 5173

The Telecommunications Act of 1996

Outstanding Issues-Role of the States

20 February 2000

(Originally Scheduled for 18 February)

Charles G. Gray

(c) 2004 Charles G. Gray

FCC Implementing Orders (1)

  • Video programming accessibility

  • Telecommunications Development Fund

  • Eliminate barriers to market entry

  • Modify regulations on media ownership

  • Broadcast license renewal procedures

  • Create Federal-State Joint Board on Universal Service Definition

  • Rules of open video systems

(c) 2004 Charles G. Gray

FCC Implementing Orders (2)

  • HDTV spectrum licenses

  • Television violence rating system

  • CDA declared unconstitutional - FCC avoided several tasks

  • FCC reforms – eliminate functions and regulations

  • Radio frequency emission standards

  • Interconnection regulations

(c) 2004 Charles G. Gray

FCC Implementing Orders (3)

  • Prevention of unfair billing practices.

  • Regulations for pay phone per-call compensation

  • Infrastructure sharing rules for ILECs

    • Collocation

  • Rules for “exempt telecommunications companies”

  • Regulations for pole attachments

(c) 2004 Charles G. Gray

FCC Implementing Orders (4)

  • Rules on alarm monitoring services

  • Rules on numbering administration

  • Procedures for preempting state’s jurisdiction in dispute settlement

  • Rules for interconnection coordination

  • Rules to prohibit “slamming”

  • Rules for compelling a carrier to provide universal service

(c) 2004 Charles G. Gray

FCC Implementing Orders (5)

  • Procedures for BOC entry into interLATA services

  • Regulations for BOC manufacturing

  • Equal access for cell phone subscribers

  • Establish the Telecommunications Development Fund

  • Local Competition Order

  • Line Sharing Order

(c) 2004 Charles G. Gray

Court Rulings on FCC Orders

  • Washington, DC Circuit Court

  • Eighth Circuit Court – Iowa Utilities Board vs. FCC (1997 and 2000)

  • US Supreme Court (24 May 2002)

    • Meaning of “Impairment”, “proprietary”, and “necessary”

    • National uniform standard too broad

    • Remanded both the Line Sharing Order and the Local Competition Order to the FCC

(c) 2004 Charles G. Gray

Courts Replace the FCC as “de facto” Regulator

  • Literally hundreds of cases filed in the 8 years since TA 96

  • A number of them have gone all the way to the Supreme Court

  • We will consider only a very few of the issues

(c) 2004 Charles G. Gray

(c) 2004 Charles G. Gray

Triennial Review - 2003

  • Adopted 20 February 2003

  • Released 21 August 2003

    • Unusual delay (usually released in three months)

    • 485 pages, plus another 100 for appendices and dissenting statements from Commissioners

  • Suits began immediately

    • US Court of Appeals in Washington, DC

    • Judges asked “very painful” questions (Feb 04)

  • Most observers expect remand to the FCC

  • Ultimate decision by the US Supreme Court

(c) 2004 Charles G. Gray

Triennial Review - Unbundling

  • Mass market loops

    • Access to copper loops (narrow and broadband)

    • Not required to unbundle broadband only

    • If copper replaced by fiber, narrowband only

  • Enterprise market loops

    • Not required to unbundle OCn loops

      • Maximum of 2 loops per carrier per customer location

    • Must unbundle dark fiber, except where states have found no “impairment”

(c) 2004 Charles G. Gray

Unbundling (2)

  • Subloops for access to multiunit customer premises

  • Network Interface Devices (NID)

  • Switching for enterprise market (DS1 and above)

    • CLECs not “impaired”

    • States are final arbitrators

(c) 2004 Charles G. Gray

Unbundling (3)

  • Switching for mass market (DS0)

    • CLECs “impaired” without access to local switching

    • States must make determination

  • Packet switching

    • ILECs not required to unbundle packet switching routers or DSLAMs

(c) 2004 Charles G. Gray

Unbundling (4)

  • Signaling networks

    • Unbundling only when CLEC is also buying unbundled switching

      • Includes signaling links and signal transfer points

  • Call-related databases

    • Only when CLEC buys ILEC switching

    • If CLEC provides its own switching, then

      • No access to LIDB, toll-free calling, LNP, calling name, operator services, directory assistance, or AIN

(c) 2004 Charles G. Gray

Service Eligibility

  • CLEC must be certified by the state to provide local voice service

  • CLEC must demonstrate that it actually provides a local voice service over every DS1

    • Provide 911/E911 capability to each circuit

  • Certify additional “architectural safeguards” (network related stuff)

(c) 2004 Charles G. Gray

Remaining Issues

  • Clarification of TELRIC rules

    • FCC will open a separate proceeding

  • “Fresh Look”

    • CLECs cannot avoid any contractual liability

  • Transition period

    • The FCC will not intervene in pending contract negotiations

  • Duty to negotiate in good faith

    • Bring in line with the “Local Competition Order”

(c) 2004 Charles G. Gray


  • Total Element Long-run Incremental Cost

  • The cost a new company using completely new technology would incur

  • Bears no relationship to the actual real-world cost of anything

  • Is it a “taking” under the US Constitution?

    • Fifth Amendment prohibits taking private property without “just compensation”

  • US Supreme Court approved May 2002

(c) 2004 Charles G. Gray

FCC Media Ownership Ruling

  • Allowable TV audience coverage increased from 35% to 45%

    • CBS and Fox already exceeded limit at 39%

    • NBC 34%

    • ABC 24%

  • No change in radio rules

    • Clear Channel owns 1,270 stations

  • Allows cross-ownership between radio, TV and newspapers

(c) 2004 Charles G. Gray

The Big Media Players

  • Murdoch-FoxTV-HarperCollins-Weekly Standard-New York Post-London Times-DirectTV

  • GE-NBC-Universal-Vivendi

  • Time-Warner-CNN-AOL

  • Disney-ABC-ESPN

  • Comcast (biggest cable company)

  • NY Times-Boston Globe, 22 newspapers, 8 TV stations, and 3 golf magazines

(c) 2004 Charles G. Gray

Public Reaction (Outrage)

  • Over one million comments to the FCC and Congress (largest response ever on any issue)

  • Multiple organizations opposed (loudly)

    • Consumer groups, labor unions, civil rights groups, NRA, Parents TV Council, etc.

  • Flawed “diversity index”

    • Multicultural Radio Corp. comes out ahead of the NY Times as a “meaningful source” of news

    • Ignores audience size

  • FCC acted with little or no prior public input

(c) 2004 Charles G. Gray

The Courts and Politics

  • Federal Appeals Court in Philadelphia issued a blocking order

    • Denied the FCC’s request to move to DC Court

  • US Senate blocked implementation

  • Final compromise was for 39% maximum TV coverage

    • “Protected” Fox and CBS current reach

(c) 2004 Charles G. Gray

Re-write of TA 96 ?

  • Start in the House Subcommittee on Telecommunications and the Internet

    • Met on 4 February 2004

    • Expect “many” hearings on policy reform this year

  • USTA President and other industry leaders testified

  • Expect results in 2006-2010 timeframe

(c) 2004 Charles G. Gray

House Energy and Commerce Committee

  • Billy Tauzin resigned as chairman

    • 16 Feb 04

    • Entering the “revolving door” at end of term

  • Replaced by Joe Barton (R. Tex)

    • Former petroleum engineer

    • Friendly to Bells, but not passionate (like Tauzin has been)

    • Thinks UNE-P (unbundled switching) is unfair to ILECs

    • VoIP is a major issue

(c) 2004 Charles G. Gray

States’ Responsibilities

  • States viewed as more favorable venue for keeping the status quo (per NARUC)

    • Best chance of keeping unbundled switching

    • Establish collocation rules and rates

  • “Impairment” decision left to each state

    • 51 jurisdictions, 12 Federal Courts

    • Not “impaired” if 3 CLEC switches or 2 wholesalers are in the market (none at this time)

  • CLECs “buying” rather than “building”

    • Moving existing lines from their own switches

(c) 2004 Charles G. Gray

“Economic Impairment”

  • Possible sources of impairment

    • Purchase and installation cost of a switch

    • Collocation cost

    • Operations Support Systems (OSS)

    • Signaling and other services and equipment

    • Backhauling traffic

    • Cost of customer transfer

    • Etc. etc., etc. (Per Chairman Powell)

(c) 2004 Charles G. Gray


  • It could take 4 years to work through state unbundling and collocation issues

  • Expect the third (and maybe fourth) remand of the Triennial Review by Circuit courts or the US Supreme Court

  • VoIP may moot many issues before the FCC can even act

(c) 2004 Charles G. Gray

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