UNE Triennial Review

1. UNE Triennial Review • Highlights • FCC’s earlier UNE decisions had been remanded for further review by both the Supreme Court and the DC Circuit • Remand revolved around interpretation of “impairment” • Unbundling rules were seen as overly permissive • Only one commissioner voted for the order in its entirety; the other four all dissented on some issues • State commissions will be determining the future of UNEs—one state at a time • The order makes a distinction between typical voice services and future broadband services in its treatment of UNEs; also makes a distinction between traditional circuit switching and newer packet switching services • Everyone is gearing up to take the decision to court—both ILECs and CLECs

2. Some details • Local Circuit Switching • Presumption of no impairment (and therefore no UNE) if switching is for business customers served by DS-1 or other high capacity loops—states have 90 days to find otherwise • Presumption of impairment (and therefore is a UNE) for the mass market—states have 9 months to decide (on a granular basis) whether there is impairment or not; if no impairment, three year transition period to phase out UNE-P

3. More details • Packet switching—not a UNE • Signaling networks—UNEs only if switching is also ordered as a UNE • Call-related databases—except for 911 and E911, not a UNE unless switching also ordered as a UNE • OSS Functions—confirmed as a UNE

4. Loops • Mass market loops (copper)—continue as UNEs, ILEC can’t retire any copper loops without approval from state commission • Line sharing—HFPL no longer a UNE; three-year transition period; price of HFPL to increase to cost of full loop UNE • Hybrid loops—no UNE for packet-switching features; only voice grade channels or high capacity loops using TDM (DS1 or DS3) remain UNEs • FTTH loops—no UNE requirement; must continue to provide access to a transmission path suitable for providing narrowband service if the copper loop is retired.

5. Enterprise loops • No impairment for OCn capacity loops • Impairment for DS1, DS3, and dark fiber loops, except where triggers set by states are met; states can remove these UNEs based on customer location-specific analysis • Dark fiber and DS3 loops are each subject to customer location specific review by the states to identify where loop facilities have been self-deployed

6. More details • Copper subloops remain UNEs; also access to wiring near a multi-unit customer location regardless of type of loop • NID remains a UNE • Dedicated Interoffice Transmission Facilities • No impairment for OCn level transport • Impairment for dark fiber, DS1 and DS3, except when state triggers are met • Continuation of EELs (enhanced extended links) • Subject to certification and audit

7. Clarifications • Section 271—checklist items 4-6 and 10 are obligations independent of section 251 • TELRIC—risk-adjusted cost of capital and depreciation life • Transition period—individual carriers to negotiate terms and conditions • FNPRM—pick and choose rules

8. Where the commissioners stand • Chairman Powell • Supported broadband relief • Supported NPRM on pick and choose rules • Dissented on the end to line sharing • Dissented on continuing switching as a UNE and on delegating decisions to the states • Firmly convinced the decision will not stand up in court—UNEs not an “unqualified good” • Opposed to lack of national policy—problem of uncertainty will hurt CLECs and ILECs alike • “the switch is the brains of one’s network and to be without one is to be a competitor on life support fed by a hostile host.”

9. The commmissioners • Kathleen Abernathy • Supports • Broadband relief • Continuation of loop and transport UNEs • NPRM on pick and choose rules • Dissents • Treatment of switching as a UNE • Delegation to the states • End of line sharing

10. The commissioners • Michael Copps • Supports • Treatment of switching • Delegation to the states • End of line sharing (though not really happy about it) • Dissents • Broadband relief • “Today . . . We adopt one of our most important decisions to date by a split decision plagued by shifting pluralities. I am disappointed that we were not able to reach compromise on all of the questions and issue a unanimous decision as previous Commissions were often able to accomplish.”

11. The commissioners • Jonathan Adelstein • Supports • Treatment of switching • Delegation to the states • Dissents • Broadband relief

12. The commissioners • Kevin Martin • Supports all of the appoints; only one not to dissent on any of the details • Saw no reason to treat the switch as any different from the other UNEs • “I believe in limited government. I believe that competition—not regulation—is the best method of delivering the benefits of choice, innovation, and affordability to consumers. The 1996 Act puts in place a policy that requires local markets to be opened to competition first, and then provides for deregulation. I believe we have faithfully implemented this policy today.”