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CONTACT: Patrick Ross
December 14, 2004
(202) 289-8928
FCC Must Relax Unbundling Requirements
May Urges Adherence to Law in National Review Online Article

WASHINGTON D.C. - The FCC tomorrow must approve interconnection rules that recognize today's innovative and competitive marketplace, Progress & Freedom Foundation Senior Fellow Randolph May writes today in National Review Online. The Commission is scheduled Dec. 15 to vote on rules regulating the extent to which incumbent telephone companies must share their facilities with competitors. Previous rules have been rejected three times by the federal courts, most recently in March, and May writes that if the agency leaves in place its overly expansive network sharing rules, it would "show a measure of disrespect for the rule of law."

"Because it is less costly for many new entrants to demand access to the incumbents' networks than it is to build new facilities, these competitors don't invest in new networks," writes May, PFF Director of Communications Policy Studies. "Likewise, incumbents are deterred from investing in new facilities because they know they must turn around and share these facilities with competitors at below-market rates." Such a policy has substantial adverse impacts on the national economy.

May fears the FCC may once again adhere to a regulatory model he calls "static regulated competition," based on a monopoly model that no longer exists. Instead, the FCC should embrace the fast-changing technological environment with a market-oriented vision he calls "dynamic deregulation." May outlined those two contrasting regulatory models in a recent scorecard he wrote to evaluate the FCC's forthcoming action.

The FCC "must finish the commendable job it started last year and completely free new broadband facilities from network sharing obligations," May says. In addition, local telephone switching equipment and high-capacity facilities should be removed promptly from network sharing requirements. "Finally, in light of the tenacity shown throughout the history of the sharing regime by those competitors who benefit from below-market pricing, the Commission must give detailed directions to ensure that relaxation of the sharing requirements is implemented promptly."

The Commission is expected to vote on its new rules tomorrow at a 9:30 a.m. meeting at FCC headquarters. Reporters are invited to contact May at 202-289-8928 today as well as after the Wednesday 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.



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