The FCC will undertake a comprehensive review of the rules used to establish wholesale pricing of unbundled network elements (UNEs). Through a Notice of Proposed Rulemaking (NPRM), the FCC is seeking industry input on a proposal to make TELRIC rules more closely account for the real world attributes of an incumbent carrier’s network. The NPRM reaffirms the 1996 decision to use a forward-looking cost methodology to determine UNE pricing. The FCC also seeks to simplify the process to make it easier for state commissions to set UNE prices.
FCC Chairman Michael Powell noted that “competition has taken root in many areas of the country,” and said that “without the correct pricing signals in the market, our rules can thwart a central purpose of the Act, the development of facilities-based competition.”
Commissioner Kevin Martin said he believes “that the prices for unbundled network elements should be based on the forward-looking replacement cost of the ILEC’s network, rather than hypothetical assumptions contained in a cost proxy model.”
Industry reaction included:
James C. Smith, Senior Vice-President, SBC Communications said he was “encouraged by the FCC’s willingness to revisit this methodology. Adjusting the pricing formula to more accurately reflect real-world costs will benefit consumers with more real competition and encourage both incumbents and competitors to invest in network upgrades.”
Susanne Guyer, senior vice president of federal regulatory affairs for Verizon Communications, said “Making sure that wholesale rates reflect real-world costs is long overdue. Making sure that carriers that lease parts of our network pay fair wholesale prices will help restore health to a sick sector of the economy.”
Herschel Abbott, BellSouth’s vice president of governmental affairs, said “the opening of this proceeding has the promise of leading, finally, to an economically rational pricing structure for the competitive telephone industry.”http://www.fcc.gov
- TELRIC stands for Total Element Long Run Incremental Cost
