PRESS STATEMENT OF

COMMISSIONER MICHAEL J. COPPS,

APPROVING IN PART, CONCURRING IN PART, DISSENTING IN PART

*Re:* *Review of the Section 251 Unbundling Obligations of Incumbent
Local Exchange Carriers*

Seven years ago this month, Congress enacted a sweeping reform of our
nation's telecommunications laws. In doing so, it sought to promote
competition in all telecommunications markets and to replace the
heritage of monopoly with the vitality of competition. Provisions to
open the local markets to competition are at the heart of this
Congressional framework. The Act contemplates three modes of competitive
entry into the local market -- construction of new networks, use of
unbundled elements of the incumbent's network, and resale. The
competition envisioned in the legislation is now, and only now, becoming
a reality. Today, because of the vision of Congress and the hard work of
American entrepreneurs across the country, there are 20 million
competitive lines serving consumers, and the number continues to grow in
spite of the severe economic downtown that the telecommunications
industries, and the nation, have suffered. This Triennial Review offered
us the opportunity to encourage this competition and to fulfill the
mandate of the law, which is "to secure lower prices and higher quality
services for American consumers."

In some ways, today's action advances that mandate. We preserve voice
competition in the local markets and we allow it to grow. We accord the
states an enhanced role in making the granular determinations about
where the rules of the game may need to be changed and where they should
be maintained in order to foster competition. One month ago, these gains
were not expected.

In other and equally important ways, however, we fail our charge. Some
competitive strategies are harmed by today's decision and, I believe
worst of all, we are playing fast and loose with the country's broadband
future, denying it the competitive air it needs to breathe in order to
flourish. Consumers and the Internet itself may well suffer.

Today's item is not the one that I would have written had I been given
*carte blanche*. Each of my colleagues could make the same statement. I
have agreed to join certain decisions that are not my preferred outcome
in an effort to find compromise and to avoid even more damage to the
competitive landscape. I appreciate the willingness of my colleagues to
engage in these discussions to find common ground. There are, however,
aspects of this Order with which I cannot agree. As I reviewed the
decisions we make today, I have tried always to keep in mind that
setting competition policy is the exclusive jurisdiction of Congress. I
have done my utmost to remain faithful to the public interest and to the
competitive framework that Congress adopted in the 1996 Act. Where I am
unable to square a decision with the statutory directives, I am
compelled to dissent.

Permit me to highlight a few of the most important issues.

On the positive side, in the face of intense pressure for the Commission
to make broad nationwide findings on impairment \-- findings that would
have doomed the future of unbundled elements such as switching \-- we
have instead managed to cobble together a majority for a more reasonable
process to conduct a granular analysis that takes into account
geographic and customer variation in different markets. We have
recognized that the States have a significant role to play in our
unbundling determinations. We have understood in many parts of this
Order that the path to success is not through preemption of the role of
the States, but through cooperation with the States. State Commissions
with closer proximity to the markets are often best positioned to make
the fact-intensive determinations about impairments faced by competitors
in their local markets. I am therefore pleased with our decision that
States should have an active part in conducting the granular analysis
necessary to determine whether and where network elements such as
switching should be available as unbundled network elements.

On transport, I believe the item is significantly improved from where it
might have been. Dark fiber remains on the list of network elements;
limitations on high-capacity transport were done in a manner that was
responsive to the facilities-based competitors' concerns; and transport
is not removed without a specific finding on a route, rather than based
on some notion of contestability in the market.

There are aspects of this Order that are certainly not my preferred
approach, but which I have had to accept in order to reach compromise.
In particular, there is the decision to eliminate access to only part of
the frequencies of the loop as a network element. I would have preferred
to maintain this access, also known as line sharing. I believe that line
sharing has made a contribution to the competitive landscape. Instead of
recognizing this contribution and encouraging it, we provide today only
an extended transition period to allow competitors to purchase the
entire loop facility as a network element, or to pair with a voice
provider, to offer the full range of services to a customer.

Finally, there are parts of this Order with which I strongly disagree.
Most importantly, I am troubled that we are undermining competition,
particularly in the broadband market, by limiting \-- on a nationwide
basis in all markets for all customers -- competitors' access to
broadband loop facilities whenever an incumbent deploys a mixed
fiber/copper loop. That means that as incumbents deploy fiber anywhere
in their loop plant \-- a step carriers have been taking in any event
over the past years to reduce operating expenses \-- they are relieved
of the unbundling obligations that Congress imposed to ensure adequate
competition in the local market. The Commission has recognized time and
again that loops are the ultimate bottleneck facility. Yet, this
Commission has chosen in this instance to perpetuate the bottleneck, and
it does so on a nationwide basis without adequate analysis of the impact
on consumers, without analyzing different geographic or customer
markets, and without conducting the granular, fact-intensive inquiry
demanded by the courts. To make matters even worse, in some markets such
as the small and medium business market, there may not be any
competitive alternatives if competitors cannot get access to loop
facilities.

I fear that this decision may well result in higher prices for consumers
and put us on the road to re-monopolization of the local broadband
market. Additionally, I worry about the negative impact of this decision
on facilities-based carriers which are practicing the kind of
competition we all talk about encouraging. They face enough challenges
in these difficult economic times without having us add to their
burdens.

A word to the wise: Other decisions are hurtling towards us. As harmful
as this decision is, it may not be the last battle this year in the
headlong rush to deregulate broadband. In a few short months, maybe
sooner, we will consider whether to deregulate broadband entirely by
removing core communications services from the statutory frameworks
established by Congress. Opponents of this change argue that this is
substituting our own judgment for that of the law, and playing a game of
regulatory musical chairs by moving technologies and services from one
statutory definition to another. We will also consider whether large
incumbent carriers providing broadband services should henceforth be
regulated as non-dominant, or lacking market power, rather than dominant
and exercising market power. In light of our goals of establishing
certainty and stability, I hope we would proclaim today that we will not
overturn these unbundling obligations in those proceedings over the next
few short months. But I caution that it could indeed happen.

It is no secret that some parties urged us to go much further today
toward a wholesale upending of the current telecommunications landscape
just when competition was beginning to take hold. Instead of preserving,
protecting and defending competition, their idea seemed to be tearing
away the infrastructure that undergirds that competition. Today's
decision is not just a big-ticket item for telephone companies on one
side or another of some admittedly arcane issues. It affects us all.
It's next month's phone bill, but it's also the next generation's
broadband and the future of the Internet. It will deeply affect our
country's future. We've got to make good, smart decisions. On broadband,
at least, we haven't done this.

I am also worried about process here. Seven years ago, when Congress
passed the landmark Telecommunications Act, the Commission implemented
its regulatory directives in a bipartisan fashion by unanimous vote,
reaching consensus under extremely short statutory deadlines. Today, by
contrast, we adopt one of our most important decisions to date by a
split decision plagued by shifting pluralities. I am disappointed that
we were not able to reach compromise on all of the questions and issue a
unanimous decision as previous Commissions were often able to
accomplish. Perhaps, given the different philosophical and regulatory
approaches which exist among us, that just wasn't in the cards here.
Nevertheless, I believe we have some lessons to learn about smoothing
the process within, exchanging ideas and paper earlier on, and making
sure we have enough time to reach and hammer out final agreements. I
also believe that the constraints placed upon Commissioners by laws that
forbid more than two of us from meeting together, talking together and
reaching agreement together hobble the regulatory process and retard our
ability to tackle complex proceedings like this one. I don't know of any
other institution that is forced to operate this way. Maybe the ability
to manage our discussions differently would not have rescued this item,
but I do think it could make a difference going forward. And we have a
lot of work to do going forward. One item that requires our immediate
attention is performance metrics. Ideally, a decision on this would have
preceded today's decision, so that incumbents and competitors alike
would know what is expected of them regarding the now fewer regulatory
requirements they must meet.

In light of the positive and negative parts of today's decision, I vote
to approve in part, concur in part, and dissent in part. Although the
bottom lines have been decided, the devil is more often than not in the
details. I am unable to fully sign on to decisions without reservations
until there is a final written product. As we finalize the draft in the
coming days, I hope all of the agency's resources will be working
towards implementing the majority opinion on all aspects of the Order so
that it can withstand the inevitable litigation that is sure to follow.
If we do not dedicate all our resources to perfecting this Order, we
will be vulnerable to the accusation that we are throwing up our hands
and expecting the courts to step in. That's not good government.

The FCC Team has an uncommonly high share of bright, talented and
dedicated people - among the country's best, inside or outside of
government. I want to thank Bill Maher and his team for their tireless
efforts and for the dedication exhibited by the Wireline Competition
Bureau staff throughout this proceeding. I'd like to thank each member
of the team individually because I know how hard they worked and how
late they burned the midnight oil. Most of all, I want to thank my
Senior Legal Adviser, Jordan Goldstein, for the endless hours, the
encyclopedic knowledge and invariably good judgment he brings to all
these issues. For his work here, he deserves both a Silver Star and a
Purple Heart.