WASHINGTON D.C. - The FCC next month plans to issue new rules on unbundling of telecom networks, responding to the latest court rebuke in the agency's eight-year attempt to put in place lawful competition rules. The agency once again must choose between static regulated competition and dynamic deregulation, according to Randolph May, senior fellow with The Progress & Freedom Foundation. Using a multipoint scorecard designed to measure whether the Commission is acting in a deregulatory, pro-competitive manner, May gave the FCC a failing grade in 2003 with its Triennial Review Order. Now he's developed a new scorecard and is hopeful the Commission this time will post a perfect score.

It is "vitally important" that the FCC "opt decisively for the pro-competitive market-oriented Dynamic Deregulatory vision that takes account of the extraordinary marketplace changes, brought about by the digital revolution, that are occurring daily before our very eyes," said May, PFF Director of Communications Policy Studies.

The scorecard highlights the fast-changing communications landscape, with the proliferation and growth of wireless, VoIP, cable telephony, and other new technology services that compete with traditional wireline services. That's why the Wall Street Journal concluded recently that, "it's a mad, mad telecommunication world."

To act consistently with the Dynamic Deregulation vision, May set four benchmarks for the FCC:

• The Commission should finish freeing broadband facilities from unbundling obligations
• The Commission immediately should remove local switching from the unbundling requirements
• The Commission promptly should remove high capacity loops from the unbundling regime
• The Commission must take specific actions to ensure prompt implementation of its UNE decision

"It would be unfortunate indeed for the FCC to opt for a continuation of an overly expansive UNE regulatory regime," May said. "Such a result would inhibit investment by ILECs in new facilities and slow the further development of long-term sustainable competition."

Background:  The FCC voted on its TRO Order in February 2003, earning the agency a "C" from May, but when the Commission finally released it in August 2003 it had earned a failing grade. The Order was sent back to the FCC by the United States Court for the District of Columbia Circuit after having been found unlawful. FCC Chairman Michael Powell told attendees at The Progress & Freedom Foundation Aspen Summit that he was determined to release new rules by the end of 2004, and the Commission is expected to vote on those new rules at its December 15 meeting.

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.