Tauzin Says Unbundle Now

While the Federal Communications Commission (FCC) fine tunes its historic unbundling decision for final publication, the telecommunications equipment manufacturing industry is losing jobs, according to House Energy and Commerce Committee Chairman Billy Tauzin.

In February a sharply divided FCC ruled on two related but distinctly different issues that will have a long-term effect on the slumping telecommunications industry. In the first decision, the FCC disappointed the regional Bell operating companies by ruling the state public utility commissions can require the Bells to continue lease their copper lines to competitors at steeply discounted rates for at least three more years.

In the second decision, the FCC gave the Bells what they have long sought: regulatory relief from sharing high-speed fiber broadband lines with competitors.

The rules, however, have yet to take effect while the FCC staff struggles with putting the massive rule changes into regulatory language.

A day after meeting with telecom equipment makers, Tauzin on Wednesday fired off a letter to FCC Chairman Michael Powell urging the Commission to put the news in place.

“Three months after the announcement of the Triennial Review decision, these companies are still starving for business because service providers will not purchase equipment until the fog of regulatory uncertainty created by the Commission’s failure to produce its final unbundling rules has lifted,” Tauzin wrote. “That fog is killing the United States’ high-tech manufacturing base.”

Tauzin added that the U.S. telecommunications equipment manufacturers have lost half a million jobs and “billions of dollars of market capitalization.” He wrote that “until there is regulatory certainty,” the telecom equipment makers will be forced to continue to cut jobs and to lose the capital with which investment is funded.

“I have arrived at the conclusion that our high-tech sector cannot wait any longer. You and your fellow commissioners should not stand back and watch U.S. technology companies die on the vine or move overseas,” Tauzin said in the letter. “The Commission needs to produce final rules immediately, and produce rules that will create a climate for investment in telecommunications and broadband equipment in this country that will enable the United States to maintain its technological superiority and to jumpstart our weak economy.”

FCC Commissioner Kevin Martin told a Banc of America Securities conference in New York on Wednesday that the final rules may be published within a month.

The FCC’s broadband ruling provides the Bells with substantial “unbundling” relief for lines utilizing fiber facilities, including no unbundling requirements for fiber-to-the-home loops or hybrid loops that utilize both fiber and cooper. The Commission also eliminated “line sharing” from unbundling requirements.

The decision represents a significant victory for Martin, who opposed Powell’s plan to free the Bells from their current local competition legal obligations under the 1996 Telecommunications Act. Currently, the Bells must lease some or all elements of their networks, including broadband lines, to competitors at deep discounts to foster competition in the local phone service market.

The Bells argue the local competition regulations have put them at a competitive disadvantage with cable companies that are not required to share their lines with rivals. They also contend the current rules have stymied investment in new fiber networks and have given the cable companies an unfair advantage in rolling our broadband service. Cable companies currently control almost 70 percent of the U.S. broadband market.

Bell competitors countered that rolling back the rules would effectively give the Bells a monopoly over high-speed broadband services delivered over telephone lines.

Powell wanted to eliminate both the local service and broadband competition requirements on the Bells, a position also favored by fellow Republican Kathleen Abernathy. But Martin, also a Republican, denied Powell a majority on the five-person FCC when he convinced Democrats Michael Copps and Jonathan Adelstein to support his plan to give the state public utility commissions the power to make deregulatory decisions about the Bells’ local service requirements.

“I recognize that there are some legitimate reasons why finalizing the Triennial Review decision has taken longer than most FCC rulemakings,” Tauzin wrote. “I encouraged the Commission three weeks ago to continue its deliberations if such deliberations were producing a better outcome than the decision to which I feared the agency had agreed in February. But even those comments are now almost a month old, and the decision’s announcement is three months old. It is time to issue the final rules.”

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