May & Darby Say Current Regs Slow Facilities Investment
WASHINGTON, D.C. - The Federal Communications Commission’s “unbundling” regime is a major deterrent to investment by both companies and investors in broadband infrastructure offered by telephone companies, as well as providers using other technologies. That is the conclusion of two well-known telecommunications experts – one of whom is a former telecommunications investment banker with first-hand knowledge of major investment decisions.
In comments filed with the FCC today as part of the agency’s review of Section 251 unbundling obligations and related broadband proceedings, Progress & Freedom Foundation Senior Fellow Randolph J. May and Adjunct Fellow Larry F. Darby, write that “the Commission’s network unbundling rules can – and should – be modified in a deregulatory fashion that will promote technology-neutral facilities-based investment in new broadband networks.” They maintain “the Commission can – and should – promote new investment and sustainable competition at the same time.”
“The Commission’s current overly regulatory and costly UNE regime, with its below cost TELRIC pricing, has an adverse effect on the infrastructure investment incentives of the incumbent local exchange companies,” they write. “The current UNE regime also creates adverse investment incentives for the competitive local exchange carriers and non-telephone providers.”
“The real-world impacts of investment, particularly with regard to broadband capabilities, of the current expansive and uneconomic UNE regime, provides a sound basis for the Commission to re-link it own actions to decisions that promote inter-modal facilities- based investment. The Commission then will have a principled basis for adopting a less costly, more deregulatory approach that is consistent with the 1996 Act’s goals,” they write.
May and Darby suggest the FCC should exercise forbearance authority granted under Section 706 of the 1996 Telecommunications Act. They also urge the use of such authority under Section 10, when appropriate, and “narrowing the availability of the existing unbundled elements under the ‘necessary and impair’ test.” Finally, they suggest a “sunset” framework for UNE requirements to “reach the facilities based endgame that the agency acknowledges best promotes consumer welfare.”
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.