*Pages 1--4 from  Microsoft Word - 25286.doc*
 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  nations  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 
 incumbents  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,  todays  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  todays  decision  and,  I  believe  worst  of  all,  we  are 
 playing  fast  and  loose  with  the  countrys  broadband  future,  denying  it  the  competitive  air  it  needs  to  breathe  in  order  to  flourish.  Consumers  and  the  Internet  itself  may  well  suffer. 

 Todays  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. 
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 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. 
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 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. 
 Todays  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.  Its  next  months  phone  bill, 
 but  its  also  the  next  generations  broadband  and  the  future  of  the  Internet.  It  will  deeply  affect  our  countrys  future.  Weve  got  to  make  good,  smart  decisions.  On  broadband,  at 
 least,  we  havent  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  wasnt 
 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  dont  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 
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 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  todays  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  todays  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  agencys  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.  Thats  not  good  government. 
 The  FCC  Team  has  an  uncommonly  high  share  of  bright,  talented  and  dedicated  people  -  among  the  countrys  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.  Id  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. 
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