1. Applying the 1996 Act TC 310 May 21, 2008

2. Current Event FCC investigating cell phone contract termination  Cancel early  Reduce over time  Take state jurisdiction away  Proposed by Verizon What concepts can we apply?

3. UNEs Unbundled Network Elements  What are network element examples? Importance of UNEs  Economies of scale prohibit entry without  Network effects prohibit entry without Interconnection not sufficient for competition  Application of strong essential facilities doctrine

4. UNE-L Refers to just the loop/transport being leased  ILEC offers wholesale loop/transport lines at TELRIC prices  CLEC leases these lines, connects to their own switch.  Just loop leasing requires collocation  Loop/transport known as enhanced extended links Economically more efficient. Facilities based competition

5. UNE-P Refers to the leasing of the entire platform  All elements of the ILEC are leased by CLEC  Leased based competition Rebranding of ILEC services  Allowed to offer their own pricing platforms  Not offering innovative services Similar to resale, but..  Repackaging  Cheaper

6. Advantage UNE-P UNE-P over UNE-L UNE-P over Resale  Resale based on ILEC retail pricing  UNE-P based on TELRIC pricing 1996 Act aimed at UNE-L  Innovative services UNE-P good for CLECs, bad for ILECs and customers?

7. Fights about UNE ILECs fight for competition?  UNE-P adds no value, not real competition  No incentive for investment  Hurts ILECs; TELRIC pricing CLECs  UNE-P allows competition where it would not be  Doesn't hurt ILECs  Near structural separation between retail and wholesale ILEC arms

8. Local Competition Order 1996 FCC Report and Order, dealing with Act  All elements available for UNE  Challenged Really resale end around Failure of impairment standard of section 251  Impairment sticks FCC must decide which elements are necessary to competition, will impair CLECs  Court orders FCC to be more specific

9. UNE Remand Order FCC tries again in 1999  Removes operator/directory assistance  Adds more specificity to line elements D.C. District invalidates again  Decision known as USTA I Unbundling is not without costs Innovation for ILECs and CLECs suffers Impairment is a balance to leasing rights, FCC needs to find balance.

10. Triennial Review Order 2003 FCC attempt to deal with UNE problems  Pushes onto States  Impairment is when non-bundling makes entry uneconomical.  UNE-P favored by States  Hot Cuts are foundation Too difficult for ILEC to do this without major costs to CLECs and customers

11. USTA II ILECs argue Triennial Review Order violates USTA I court order District court sides with ILECs again  Violated obligations by subdelegating  Definition of impairment still in violation of USTAI FCC makes not of this in the Order  Hot Cut orders do not have empirical support Supreme Court does not grant certiorari

12. USTA II Repercussions Switches removed  UNE-P invalidated? States still applying Should be preempted, impairment decision of FCC  UNE-L should be expanding  CLECs just leaving AT&T not seeking further customers following USTA II  ILECs Win  Applies only to circuit-switched networks, old tech

13. Why Important Battle between FCC and Courts over interpretation  Courts balance FCC against intent of Congress  FCC more competition biased than Congress? Repercussions are minimal  Signal of phasing out of PSTN  Signal of convergence