Transcript Telecommunications Act of 1996

Telecommunications Act of 1996
• Signed into law, February 8, 1996
• “ An Act to promote competition and
reduce regulation in order to secure lower
prices and higher quality service for
American telecommunications consumers
and encourage the rapid deployment of new
telecommunications technologies.”
What does the Act do?
• Adds a new Part II to Title II of the 1934 Act
– Development of Competitive Markets
• Articulates a surprisingly specific plan to maintain
and expand universal service
– Actually puts the words “universal service” into law for
the first time
• Significantly changes the function of state
commissions
– Lots of “un-funded mandates”
Section 253
Removal of Barriers to Entry
• No state or local statute or regulation or other requirement
may prohibit the ability of any entity to provide any
interstate or intrastate telecommunications service
• State may impose on a competitively neutral basis
requirements necessary to protect and advance universal
service
• State or local governments maintain authority to manage
public rights of way, or to require competitively neutral
compensation for its use
• Preemption of any requirements that do not agree with
these provisions
The big challenge
• Getting competition into local service
– Resale
– Unbundling
– Facilities based---the ultimate goal
• How to make that happen????
Section 251
Interconnection
• General duty of telecommunications
carriers
– To interconnect directly or indirectly with
facilities and equipment of other telecom
carriers
– Not to install network features, functions, or
capabilities that do not comply with standards
and guidelines for interconnectivity or for ADA
compatibility
Section 251(LECs)
• Obligations of all Local Exchange Carriers
– Resale: duty not to prohibit or impose unreasonable
conditions on resale of its telecom services
– Number portability: ability of users to retain telephone
number at same location without impairment when
switching carriers
– Dialing parity: no dialing delays for DA, Operator, etc.
– Access to rights of way: access to poles, ducts, conduits
– Reciprocal compensation: for transport and termination
of telecommunications
Section 251(ILECs)
• Additional obligations of ILECs
– Duty to negotiate in good faith
– Interconnection with own network for
transmission and routing of telephone exchange
service and exchange access at any technically
feasible point in the network that is at least
equal in quality to that provided to itself at rates
that are just and reasonable and
nondiscriminatory
Section 251 (ILECs)
– Unbundled access: nondiscriminatory access to network
elements on an unbundled basis at any technically
feasible point at rates, terms, and conditions that are
just, reasonable and nondiscriminatory; and in a manner
that will allow requesting carriers to combine such
elements in order to provide telecom service
– Resale: sell at wholesale rates any telecom service that
the ILEC provides retail to subscribers who are not
telecom carriers; states may prohibit a reseller from
buying wholesale rates available to one category of
customer and selling to another category (residential
versus business customer for example)
Section 251 (ILECs)
– Notice of changes: reasonable public notice of
network changes
– Collocation: duty to provide at just and
reasonable rates physical collocation of
equipment necessary for interconnection or
access to unbundled elements at the premise of
the ILEC; may provide virtual collocation if
can prove to state commission that physical is
not practical
FCC to keep in mind . . .
• In determining what UNEs to make available, had
to consider whether
– Access to proprietary elements is necessary
– Failure to provide access would impair the ability of the
carrier to provide services it seeks to offer
• Preservation of state access regulations
– So long as they are consistent with requirements of
Section 251 and don’t prevent implementation of this
section
Rural exemption
• ILEC obligations shall not apply to a rural
telephone company until
– Bona fide request for interconnection or
unbundled elements is received and the state
commission determines the request is not
unduly burdensome and won’t harm universal
service
– State commission has 120 days to decide
Section 252
Negotiation and Arbitration
• Agreements between ILECs and other carriers can
be reached in two ways
– Negotiation (can request mediation)
– Arbitration by state commission (135th to 160th day)
after request received by ILEC
• State commission has 9 months
• State commission must approve all agreements
(negotiated or arbitrated)
• FCC will act if state commission does not
Section 271
InterLATA Relief for RBOCs
• RBOCs able to provide out-of-region
InterLATA services
• RBOCs could not provide in-region
InterLATA services until met Section 271
requirements
• RBOCs had to apply for relief on a state-bystate basis
Section 271
Competitive Checklist
• RBOCs had to meet 14 point checklist before
could be approved for interLATA relief
– Interconnection
– Nondiscriminatory access to UNEs
– Nondiscriminatory access to poles, ducts, conduits and
rights of way
– Local loop transmission from the central office to the
customer’s premise unbundled from local switching or
other services
– Local transport from the trunk side of a wireline switch
unbundled from other services
More competitive checklist
• Local switching unbundled from transport,
local loop transmission or other services
• Nondiscriminatory access to
– 911 and E911
– Directory assistance to allow the other carrier’s
customers to obtain phone numbers
– Operator call completion services
– White page directory listing
Even more on the checklist
– Nondiscriminatory access to databases and
associated signaling necessary for call routing
and completion
– Nondiscriminatory access to such services or
information as are necessary to allow the
requesting carrier to implement local dialing
parity
– Reciprocal compensation arrangements
– Telecom services available for resale
FCC duties in Section 271
• FCC had the final decision making authority but
first had to
– Confer with the Attorney General
• Attorney general could use any standard
– Confer with state commissions
• FCC had to make a determination that
– RBOC had met all requirements
– That RBOC will follow Section 272 requirements
Section 272
Separate Affiliates and Safeguards
• RBOC to have a separate affiliate for three
years to provide
– Manufacturing
– Origination of in-region services
• RBOC not to discriminate in favor of its
affiliate
• RBOC to undergo an audit every two years
Enforcement authority
(Section 271(d)(6)
• If FCC determines that a BOC has ceased to
meet any of the conditions required, may
– Issue an order to correct deficiency
– Impose a penalty
– Suspend or revoke approval
• Complaint procedure to be developed by
FCC
Section 271 process
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It took almost 7 years!
9 filings withdrawn
5 filings denied
First filing, Ameritech in Michigan, filed on
January 2, 1997
• Final approval, Qwest in Arizona, on
December 3, 2003
How competitive is competitive?
• Notes that Congress declined to adopt a market share or
similar test – FCC didn’t do so either
– New York: 1,118,180 competitive lines; 651,793 (35,753) own facilities,
152,055 (137,342) UNE, 314,332 (63,547) resale
– Texas: est. of 840,000-890,000 competitive lines; 302,000 (244,000)
UNE, 349,000 (191,000) resale
– Kansas: competitors serve 9%-12.6% of total lines
– Oklahoma: competitors serve 5.5%-9% of lines
– Massachusetts: 513,000 own facilities, 93,000 UNE, 268,000 (30,000)
resale
– Arkansas: 98,500 CLEC lines (40% residential), with 24,000 UNEs;
34,000 resale
– Missouri: 295,000 CLEC lines (20% residential), with 76,000 UNEs;
107,000 resale
– Vermont: 21,500 CLEC lines with 15,900 of them resale
Public Interest Analysis
• Benefits of competition in local exchange
and long distance markets
• Removal of barriers to competitive entry
• Assurance of future compliance
– Performance remedy plan
– Provisions of section 271(d)(6), liquidated
damages through interconnection agreements,
antitrust and other private causes of action
So where is it all now?
• No standalone long distance industry
– SBC bought AT&T long distance and the company is
now the new AT&T
– Verizon bought MCI and the new company is Verizon
• No more separate subsidiary requirement
– FCC determined that there is enough competition so
these new companies cannot exercise market power
• Focus is now on cross-platform competition