Sonic Telecom Seeks Return of Cost-Based Unbundled Network Elements

By: Andrew Regitsky

Anyone who believes that contentious telecommunications issues are ever completely resolved is clearly new to the industry.  In recent weeks, we have seen 8YY access charges and net neutrality reopened as aggrieved parties respond to the arrival of a new and probably more sympathetic FCC.   

The latest issue to be reopened is the availability of cost based ILEC unbundled network elements (UNEs).  On October 28, 2020, the FCC released a Report and Order (Order) in Docket 19-308 that initiated a phase out of cost based ILEC unbundling requirements almost everywhere except in the most rural areas of the country.  The Commission explained, 

In the nearly quarter-century since the passage of the 1996 Act, the telecommunications marketplace has transformed to a marketplace characterized by competition and technological innovation.  Former monopolist incumbent local exchange carriers (LECs) are now one of many intermodal competitors, facing fierce competition from competitive LECs, cable providers, and wireless providers, among others. The Commission has repeatedly adjusted the incumbent LEC-specific obligations in the 1996 Act, including unbundling and resale requirements, to account for changed circumstances. With this Report and Order, the Commission would continue to modernize these requirements and would end unbundling and resale requirements where they stifle technology transitions and broadband deployment. The Report and Order would preserve unbundling requirements where they are still necessary to realize the 1996 Act’s goal of robust competition benefiting all Americans.  (Fact Sheet, Docket 19-308). 

Sonic Telecom, however, has decided that two cost-based UNEs – unbundled DS0s and unbundled Dark Fiber – are worth fighting for.  In a Petition for Reconsideration filed on February 8, 2021 in Docket 19-308, it asserts: 

The Commission should reverse actions taken by the previous administration that hinder, rather than promote, the most aggressive fiber to the home (“FTTH”) builders—those using unbundled network elements (“UNEs”) as a stepping-stone for fiber buildout.  The remote learning during the pandemic has dispelled the myth that the Commission need only promote broadband and fiber build out to rural and less densely populated areas.  Commission policies need to spur deployment to underserved and unserved communities in urbanized areas, too.  The record overwhelmingly demonstrates two UNEs – unbundled DS0 Loops and unbundled dark fiber – are key to FTTH buildout by those using them (competitors) and those responding to the competition with their own buildout (incumbent local exchange carriers (“ILECs”)).  Cutting off access to these elements, even at a future date, disrupts today’s plans for future fiber buildout, as well as investment in new, innovative technology delivered over these network elements.  (Sonic Telecom Petition for Reconsideration, Docket 19-308, filed February 8, 2021, p. I). 

Multiple declarations and economic studies in the record, as well as the findings of a fellow federal governmental agency, contradict the Commission’s finding and instead demonstrate that unbundling spurs deployment of new networks and promotes “the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.”  The record overwhelmingly demonstrates (1) significant investment in fiber network deployment by UNE-based competitors in both urban and rural areas; (2) competition ILECs face from UNE-based competitors stimulates ILEC network investment; and (3) competitors use of UNE copper loops and UNE dark fiber fosters innovation and the transition to more advanced technologies.  (Id., p. 5). 

The Petition has a real chance of success.  When the Report and Order was originally released, then commissioner and now Acting Chairwoman Jessica Rosenworcel partially dissented from the majority decision.  She noted,  

The not-so-good news is that despite [USTELCOM’s] efforts to forge this [UNE] compromise, this decision still has deficiencies. While I support the fundamentals of this compromise, I think our analysis is lacking. It too casually dismisses concerns about competitive entry, and too often asserts the presence of competition without additional evidence.  I think this failing is most pronounced when it comes to broadband competition. In particular, I am concerned that this decision relies on analyses that overstate the presence of competition and do not meaningfully consider how the retirement of legacy facilities will impact the availability of consumer broadband in the future.  (Docket 19-308, Statement of Commissioner Jessica Rosenworcel). 

Rosenworcel was joined by the other Democrat at the Commission, Geoffery Starks who also partially dissented from the Report and Order.  This suggests that once a Democrat majority is established at the FCC, we may see the availability of UNEs in additional and more urban areas of the country.