The FCC’s Implementation of the 1996 Act: Agency Litigation Strategies and Delay

I. INTRODUCTION Since it began promulgating rules to implement the local competition provisions of the Telecommunications Act of 1996 ("1996 Act"),(1) the Federal Communications Commission ("Commission" or "FCC") has been under attack in the courts. The road has been a rough one, and the Commission has lost on a good many issues. Most recently, for example, the United States Court of Appeals for the Eighth Circuit vacated the pricing rules that the Commission had directed states to use in setting prices for incumbent local exchange carriers' ("ILECs" or "incumbents" or "incumbent carriers") unbundled network elements ("UNEs").(2) Earlier this year, in separate opinions, the District of Columbia Circuit vacated and remanded key aspects of the Commission's collocation and reciprocal compensation rules.(3) In practical terms, the litigation has meant that today--nearly four and one-half years after President Clinton signed the 1996 Act into law--much remains uncertain regarding the local competition requirements. The Commission has regularly accused its opponents in these legal battles--chiefly the ILECs--of using litigation to impede the implementation of the 1996 Act's local competition provisions. In October 1999, Chairman William Kennard upbraided a group of incumbent carriers for refusing to "think about competition" and responding instead to the Commission's rules with "confrontation."(4) In an earlier interview with the Los Angeles Times, Chairman Kennard said that one reason why local phone competition had not developed more quickly was that "too many of the stakeholders in this debate would rather litigate than compete."(5) Former Chairman Reed Hundt was even more blunt. Incumbent carriers, he said, rely on lawsuits to "bolster monopolies and stifle interstate commerce and create years of litigation-induced delay."(6) These criticisms of incumbent carriers may not be wholly without foundation. Some analysts have speculated that the largest incumbent carriers, the regional Bell operating companies ("RBOCs"), may have business reasons for protecting their existing positions in the local exchange markets, at the expense of gaining entry into the long-distance business under section 271.(7) Even if these carriers have tried to use litigation to postpone opening their networks to competitors, however, that is only part of the picture. As discussed in this Article, if litigation has in fact slowed the introduction of competition in the local exchange markets, the Commission itself must share some of the blame. In several of the Orders in which the Commission has implemented the 1996 Act's local competition provisions, the Commission has acted aggressively, and it has taken positions that have been in tension--if not directly at odds--with some of the 1996 Act's key provisions. The FCC might more effectively have encouraged the introduction of competition in the local markets had it taken an approach less antagonistic toward parties affected by its local competition rules and more defensible in light of the statute's provisions. II. THE STATUTE, THE COMMISSION'S ORDERS, AND THE RESULTING LITIGATION Although this Article is not meant as a comprehensive summary of the 1996 Act or the Commission's local competition precedent, it is useful to review quickly the background of the controversies discussed within.(8) A. The 1996 Act The 1996 Act's local competition provisions appear in sections 251 and 252.(9) Acting on the hypothesis that competition would come more swiftly to the local exchange markets if competitors were given access to some of the incumbent carriers' existing facilities, Congress, in section 251, imposed certain duties on various types of local exchange carriers.(10) Incumbent carriers are subject to the most demanding requirements.(11) Among many other things, incumbent carriers must provide requesting telecommunications carriers with "unbundled access" to those network elements that the Commission determines must be made available--that is, incumbents must lease to competitors certain pieces or elements of their networks. …