House Commerce Committee Holds Hearing on FCC Triennial Review Order

February 26, 2003. The House Commerce Committee's Telecom and Internet Subcommittee held a lengthy hearing. All five Commissioners of the Federal Communications Commission (FCC) explained and defended their positions in the divided Triennial Review Order which the FCC announced last week. Key members of the Subcommittee condemned the UNE-P portion of the order, and predicted its eventual reversal by the courts.

On February 20, the FCC adopted, but did not release, a report and order regarding the Section 251 unbundling obligations of incumbent local exchange carriers (ILECs). The FCC issued only a short press release [2 pages in PDF] and an attachment [4 pages in PDF]. See, stories in TLJ Daily E-Mail Alert No. 609, February 21, 2003.

The FCC stated that the order provides that there is no unbundling requirement for fiber to the home (FTTH) loops. It also stated that the order provides that there is no unbundling requirement for a transmission path over hybrid loops utilizing the packet switching capabilities of their DLC systems in remote terminals. However, ILECs must still provide unbundled access to a voice grade equivalent channel and high capacity loops utilizing TDM technology, such as DS1s and DS3s. The order provides that ILECs must continue to provide unbundled access to copper loops and copper subloops. Commissioners Powell, Abernathy and Martin formed the majority on these issues.

Also, the order eliminates line sharing as an unbundled network element. However, while the Bell companies obtained much of the broadband regulatory relief which they sought, the FCC declined to provide the UNE-P relief that they sought. Commissioners Martin, Copps and Adelstein formed the majority on these issues, while Powell and Abernathy vociferously dissented.

See, statement [PDF] of Michael Powell at February 20 FCC meeting, statement [PDF] of Kathleen Abernathy, statement of Michael Copps, statement [PDF] of Kevin Martin, and statement [PDF] of Jonathan Adelstein. The Commissioners' prepared statements at the February 26 hearing, which they read or paraphrased in part, mirrored their February 20 statements. See, February 26 hearing statements in PDF of Powell, Abernathy, Martin, Copps, and Adelstein.

Leading members of the Subcommittee, including Rep. Billy Tauzin (R-LA), Rep. John Dingell (D-MI), and Rep. Fred Upton (R-MI), criticized the UNE-P portion of the prospective order, but praised most of the broadband related provisions. However, some members, such as Rep. Ed Markey (D-MA), argued the opposite -- that the UNE-P portion of the order was appropriate, but that broadband regulatory relief was not appropriate.

Rep. Upton, the Chairman of the Subcommittee, read a prepared statement. He said that "Unfortunately, the majority in the Triennial Review failed to follow Chairman Powell's bold vision and leadership. The majority missed a great opportunity. Where they had the chance to provide certainty, they have provided uncertainty. Where they had a chance to provide clarity and stability, they opted for chaos and continued regulatory haggling. In their third attempt to write rules for network unbundling, they have failed and the third time is no charm. They have failed to follow the standards established by Congress, written into the 96 Act, and reinforced by the courts."

Upton quipped, "Sadly, the FCC's model is a form of competition that only French farmers could love."

Rep. Tauzin, the Chairman of the full Commerce Committee, stated that "the telecom sector is in a dangerous state of economic disrepair" and that "excessive regulation limits investment". He added that "regulatory uncertainty is the death knell of the telecommunications sector".

He praised Powell and Abernathy for the positions which they took on the UNE-P portions of the Triennial Review order. "Unfortunately, three of our Commissioners seem to think that you can get the telecom sector back to its peak ... by creating a fog of regulatory uncertainty for years to come". He added that the 51 jurisdictions' implementation will be challenged in 51 different courts, and then in 12 different appeals courts. "What a mess," he said.

He accused the three members of the majority of "giving a sick patient another lethal dose of uncertainly, of extended regulatory confusion, and subsidized phony competition".

He then stated that "I will say that it appears that we have a lot to be exited about with respect to the deregulation of broadband facilities. I will withhold final judgment on that until we have seen the final rules."

"But a deregulated environment for broadband is one thing. You also need an attractive market for investment."

He said the the FCC's UNE-P order will give WorldCom, which he called "this wonderful honest telecom company", the "right to use other companies' facilities at below cost, for at least another three years and nine months".

Rep. Dingell also criticized the FCC's UNE-P order in his statement. He said that "only facilities based competition is sustainable".

Rep. Rick Boucher (D-VA) (at left) a senior member of the Subcommittee, supported the views of Reps. Tauzin and Dingell. He also went into the details of how the broadband portions of the order will be drafted. He said that "The benefits of that decision could well be negated by the other decision made by the Commission that would enable the public service commissions of the states to pass on whether or not the old copper networks could then be retired, as those copper networks are overbuilt with modern fiber optic facilities. If the LECs are ultimately required to maintain and operate the old networks, there will be little incentive to invest in the new ones. As the Commission drafts an order incorporating these decisions, I hope that you will provide clarity on this matter by ensuring that the LECs may retire the old copper plant as new and modern facilities are constructed."

On the other hand, several members of the Subcommittee praised the UNE-P, and criticized the broadband, portions of the FCC order. These included Rep. Markey, Rep. Anna Eshoo (D-CA), and Rep. Bart Stupak (D-MI).

Rep. Markey said in his statement [PDF] that the Bells argued that "if you de-regulate their new investments for high speed service, take out pesky competitors in the broadband marketplace, and remove certain regulatory oversight, then they'd really be going gangbusters getting fiber out to people's homes. They wanted a policy of ``new wires, new rules.´´ Last Thursday, three of your agreed to endorse this proposition. And almost immediately afterwards the Bell companies announced that they weren't going to invest. They will not deploy; that the premise of 4 years of legislation and months of your work at the FCC was nothing more than a ``fiber fable.´´"

See also, archived audio of hearing.