Covad views FCC’s Section 271 ruling as favorable
By Donny Jackson
TelephonyOnline.com, Oct 29 2004
Covad Communications expressed optimism that a recent FCC ruling will ensure that the CLEC will have access to line sharing in RBOC territories as long as legacy networks remain in place.
Last week, the FCC clarified RBOCs will not have to unbundle new fiber networks to meet Section 271 obligations that allowed the carriers to enter the long-distance market. In his comment on the ruling, FCC Chairman Michael Powell stated that the freedom from unbundling did not include copper-based technologies such as line sharing, although Commissioner Kevin Martin said the order freed RBOCs from line-sharing obligations.
"Clearly, we believe Chairman Powell got it right," said James Kirkland, Covad’s senior vice president and general counsel. "This order keeps in place existing 271 obligation for line sharing."
A Legg Mason report released yesterday agreed that most of the commission believes line-sharing access will remain an RBOC obligation under Section 271, although there is considerable legal uncertainty surrounding the matter. The report also predicted line sharing would be addressed in greater detail when the FCC approves permanent rules regarding unbundled network elements (UNEs) under Section 251--something Powell has vowed the commission will do in December.
Having line sharing restored in the permanent UNE rules would be beneficial to Covad. Not only does Section 251 apply to all ILECs--not just RBOCs--those unbundled elements must be offered to competitors at TELRIC rates established by state commissions. In contrast, access under Section 271 is subject to a "just and reasonable" rate standard that generally results in prices that are more than TELRIC.
Even if the FCC nixes line sharing in the permanent UNE rules, Kirkland said Covad should be able to maintain line-sharing access under Section 271.
"Even under the most aggressive fiber deployment scenarios, it is clear that legacy copper loops will remain a ubiquitous infrastructure for reaching consumers and businesses for many years to come," Kirkland said in a prepared statement. "New technologies, such as ADSL 2+, will ensure that these copper facilities can be utilized to provide a wide variety of new and innovative services."
In addition, Covad has secured line sharing in Qwest’s territory until April 2007 via a commercial agreement with the RBOC. Covad also has struck similar deals with other two other RBOCs, but the Verizon Communications pact expires in February 2005 and the SBC Communications agreement ends in September 2005.
In preparation for the time when ILECs make large-scale fiber deployments--and thereby removing any obligation to give CLECs access to last-mile facilities--Covad is testing alternative technologies such as WiMAX.
While line sharing is a primary concern for the residential market, business lines account for 72% of the Covad’s revenues. In the business market, Covad--like many other facilities-based CLECs--is hopeful the FCC will maintain TELRIC-priced access to DS-1 and DS-3 loops, Kirkland said.
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