Before the

Federal Communications Commission Washington, D.C. 20554

In the Matter of 2016 Biennial Review of Telecommunications Regulations Rule Parts Containing Regulations Administered by the Wireline Competition Bureau (WCB)

) ) ) ) ) ) ) ) )

WC Docket No. 16-132

COMMENTS OF THE UNITED STATES TELECOM ASSOCIATION

Diane Griffin Holland Jonathan Banks 607 14th Street, NW, Suite 400 Washington, D.C. 20005 (202) 326-7300

December 5, 2016

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TABLE OF CONTENTS

I. INTRODUCTION.................................................................................................................. 1

II. THE COMMISSION SHOULD ELIMINATE ANY REGULATIONS THAT INHIBIT BROADBAND INFRASTRUCTURE INVESTMENT.............................................................. 7

A. The Commission Should Reexamine Monopoly Era-Driven Regulations That Apply Only to Bell Operating Companies and Incumbent Local Exchange Companies. .......... 8

B. The Commission Should Eliminate Costly and Burdensome Accounting, Reporting, and Recordkeeping Regulations. .......................................................................................... 9

C. The Commission Should Reverse its Title II Classification of Broadband Internet Service. .................................................................................................................................. 10

D. The Commission Should Further Streamline and Repeal Other Regulations as Necessary to Improve Efficiency, Consistency, and Fairness in Commission Processes................................................................................................................................................. 11

III. CONCLUSION. ................................................................................................................... 16 APPENDIX………………………………………………………………………………...…….18

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SUMMARY

“Broadband is the great infrastructure challenge of the early 21st century.”1

A substantive biennial review consistent with section 11’s directive that the Commission

“shall review all regulations . . . that apply to the operations or activities of any provider of

telecommunications service” is long overdue. The Commission has given short shrift to this

requirement for years even while telecom markets, providers and services have changed

dramatically as consumers and businesses demand new products and services. This biennial

should be a searching review and reevaluation of the Commission’s legacy rules to ensure that

they do not interfere with the drive to build and upgrade broadband infrastructure.

Regulators have traditionally struggled to keep pace with technology and innovation in

the telecom arena, which are moving at lightning speed. For example, the Commission continued

to regulate traditional phone companies as dominant providers of voice services until their

collective share of voice services dipped below 20%, prolonging legacy regulatory costs, which

did not serve consumers or innovation well, for years after they should have been removed. That

is even more true today, as communications through social media and other broadband-reliant

modes have quickly become an indispensable part of life for all Americans. The

telecommunications service environment that existed even four years ago when the last review

was undertaken has drastically changed – and this review must examine how the governing

regulatory structure should change along with it.

1 Federal Communications Commission, Connecting America: The National Broadband Plan, at XI (2010) (NBP).

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It is imperative that the Commission take seriously its mandate to examine the rules

applicable to telecommunications carriers every two years, and eliminate any that are no longer

necessary in the public interest. This examination should be rigorous and forward-thinking, and

should take into account that backward-looking, stifling regulations will hinder innovation and

discourage companies from continuing to invest in modern, next-generation networks. What

former Chairman Martin stated in a separate statement to the 2002 biennial review report is worth

repeating: “A fundamental premise of the 1996 Act and section 11 is that where competition is

present, competition – and not regulation – will best maximize consumer welfare.” The National

Broadband Plan recognized that “regulations that require [maintenance of old technologies] …

lead to investments in assets that could be stranded. These regulations can have a number of

unintended consequences, including siphoning investments away from new networks and

services.”2 Recently, the Commission explained its rationale for eliminating outdated legacy

regulations as to allow carriers to focus resources “on building out broadband and investing in

modern and efficient networks and services.”3 Chairman Wheeler has likewise touted the

benefits of “eliminat[ing] outdated, unnecessary rules to let the marketplace work.”4

This biennial review should operationalize the long and broadly held recognition that

rules and regulations written for another time can harm consumer welfare and competition by

restraining investment and innovation in new facilities and new ways to deliver service. Those

rules should be revisited and reformed. Thus, the guiding mantra should be where meaningful

2 NBP at 59. 3 Petition of USTelecom for Forbearance Pursuant to 47 U.S.C. § 160(c) from Enforcement of Obsolete ILEC Legacy Regulations That Inhibit Deployment of Next-Generation Networks, et al., 31 FCC Rcd 6157, 6159 ¶ 2 (2015) (Modernization Order). 4Id., Statement of Chairman Tom Wheeler.

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economic competition exists, the Commission must eliminate any economic regulations that

prevent market forces from working as intended. Where such competition does not exist, the

Commission should still consider whether its rules are working and modify those that are not.

We welcome the opportunity to help ensure, in the words of Commissioner Pai, that the

Commission is bold, pro-active, and forward-thinking in conducting this biennial review, and that

it results in the modernization of the Commission’s rules to fit with the current state of the

telecommunications marketplace.

1

Before the Federal Communications Commission

Washington, D.C. 20554

In the Matter of 2016 Biennial Review of Telecommunications Regulations Rule Parts Containing Regulations Administered by the Wireline Competition Bureau (WCB)

) ) ) ) ) ) ) ) )

WC Docket No. 16-132

COMMENTS OF

THE UNITED STATES TELECOM ASSOCIATION

The United States Telecom Association (USTelecom)5 submits these comments in

response to the Federal Communications Commission’s (FCC or Commission) invitation to

provide comments as to what regulations administered by WCB should be modified or repealed

as part of the 2016 biennial review.

I. INTRODUCTION.

The last serious overhaul in telecommunications law happened two decades ago with the

1996 Act. Since then, in the biennial reviews undertaken by the Commission have in most

instances failed to take a deliberate and detailed look at whether existing economic regulations

are keeping pace with how telecom services are being provided. At the same time, there is

overwhelming evidence that many FCC regulations are outdated and ill-suited to address today’s

telecom industry in a manner that promotes the purposes of the Communications Act to make

5 USTelecom is the premier trade association representing service providers and suppliers for the telecom industry. Its diverse member base ranges from large publicly traded communications corporations to small companies and cooperatives – all providing advanced communications service to both urban and rural markets.

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communications services available to all, and to promote safety of life and property. More

importantly, many legacy regulations unnecessarily increase provider costs, especially for small

carriers, interfering with new investments in broadband and doing little to promote the building of

broadband infrastructure that this country will need to meet the present and future needs of its

citizens.

To the Commission’s credit, it has acted to modernize its regulations in some areas. For

example, the updates to the Universal Service programs have brought greater efficiency and

clarity to providers and increased the ability to provide broadband services to more Americans.

Additionally, the Commission’s long-delayed recognition that incumbent LECs no longer

dominate the voice market was a major step in the right direction to level the playing field in

recognition of the numerous and diverse service providers in that marketplace.

But the job is far from done, as many monopoly-era regulatory relics that have no place in

today’s competitive marketplace remain on the books. We have shown through comments in

other proceedings that competition for communications services, including voice, mobile, video,

and data, is thriving. By the end of 2015, approximately 50 percent of U.S. telephone households

were wireless only.6 Of the remaining households, USTelecom estimates that 24 percent used

landline services from non-ILEC – predominantly cable providers, 7 percent used ILEC VoIP,

and a mere 19 percent of households used traditional ILEC switched voice service.7 Also, 53

6 Blumberg, Stephen J. and Luke, Julian V., Centers for Disease Control, Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, July–December 2015 (CDC December 2015 Wireless Substitution Report) (May 2016) at Table 1, available at http://www.cdc.gov/nchs/nhis.htm. The CDC data state that 48.3 percent of all households were wireless-only while 3.1 percent of households had no telephone. 7 See Federal Communications Commission, Voice Telephone Services: Status as of December 31, 2015 (FCC December 2015 Voice Telephone Services Report) (Dec. 2016) at Figure 2. The

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percent of residential voice connections were served by ILECs and 47 percent were served by

non-ILECs, mostly cable operators. By year-end 2015, 59 percent of residential wired

connections were VoIP, while Switched Access Lines made up only 41 percent.8

Consumer and residential broadband and video competition are likewise very strong. As

of 2015, 60 percent of fixed percent broadband connections were served by cable providers, 37

by wireline providers, mostly ILECs, and 3 percent by satellite and fixed wireless providers.9

Mobile wireless is the fastest growing broadband segment, with subscribers growing from near

nothing in 2005 to 253 million in 2015.10 For subscription video, Commission data show that

cable providers had 53 percent of multichannel video subscribers, satellite providers had 34

percent, and telecom providers had 13 percent as of the end of 2014, and competitive share shifts

continue.11 Meanwhile, more than half of Americans are now streaming video online,12 and

report states that there were 67.5 million residential connections, consisting of 25.8 ILEC Switched Lines, 10.1 ILEC VoIP Connections, 1.8 million Non-ILEC Switched Lines, and 29.9 million ILEC VoIP Connections. 8 Id., at Figure 2. 9 Federal Communications Commission, Internet Access Services: Status as of December 31, 2015 (FCC December 2015 Internet Access Report) (Nov. 2016) at Figure 13. Total reported residential connections were 93.4 million, consisting of 55.8 million cable modem, 34.8 million wireline (fiber, DSL, and other copper) and 1.9 million satellite and 0.9 million fixed wireless. 10 Id., at Figure 11. 11 Federal Communications Commission, Seventeenth Report, Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, MB Docket No. 15-158, DA 16-510 (rel. May 6, 2016) at 31 and Table III. A. 5, available at https://apps.fcc.gov/edocs_public/attachmatch/DA-16-510A1.pdf. See also Frost & Sullivan, North American Residential Multichannel Video Tracker: Fourth Quarter 2015 (March 2016) (Frost Video Tracker Fourth Quarter 2015) at US Market Screen Shot (stating that video subscriber shares for year-end 2015 were 54 percent for cable, 33 percent for satellite, and 13 percent for IPTV). 12 eMarketer, For the First Time, More Than Half of Americans Will Watch Streaming (Feb. 3, 2016), available at https://www.emarketer.com/Article/First-Time-More-Than-Half-of-Americans-Will-Watch-Streaming-TV/1013543.

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traditional subscription video services appear to be in decline as consumers “cut the cord” and

rely on “over the top” video services.13 According to a recent survey, approximately 15 percent

of Americans have dropped their subscription video provider, in addition to 9 percent who never

had subscription video.14

The business marketplace is likewise highly competitive. By the end of 2015, ILECs

provided only 49 percent of business voice connections.15 Of business broadband connections at

the end of 2015, USTelecom estimates that 44 percent were served by cable providers.16

Competition for dedicated high-speed lines business broadband, or business data services (BDS),

is also widespread; for example, an economic analysis of BDS data collected by the Commission

showed that as of 2013 non-ILECs had deployed competitive facilities in 95 percent of census

blocks containing 99 percent of businesses.17 The analysis further found that competitive

providers earned more than half of all BDS revenues.18

13 See, e.g. Leichtman Resarch Group, Major Pay-Tv Providers Lost About 385,000 Subscribers in 2015 (Mar. 10, 2016), available at http://www.leichtmanresearch.com/press/031016release.html. See also Frost Video Tracker Fourth Quarter 2015 at US Market Screen Shot. 14 Horrigan, John, and Duggan, Maeve, Pew Research Center, Home Broadband 2015 (December 21, 2015) at 6, available at http://www.pewinternet.org/2015/12/21/home-broadband-2015/. 15 FCC December 2015 Voice Telephone Services Report at Figure 2. 16 See FCC December 2015 Internet Access Report at Figures 11 and 13. USTelecom estimates business connections by subtracting residential connections in Table 13 from total connections in Table 11. 17 Mark Israel, Daniel Rubinfeld & Glenn Woroch, Analysis of the Regressions and Other Data Relied Upon in the Business Data Services FNPRM and a Proposed Competitive Market Test: Second White Paper, Business Data Services in an Internet Protocol Environment, et al., WC Docket Nos. 16-143, 15-247, 05-25, RM-10593, at 1 (Jun. 28, 2016). 18 Id., at 2.

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Our members’ ability to continue to innovate and lead the world in broadband

deployment, including 5G and other next-generation technologies, depends on a commitment by

the Commission to maintain economic regulation only where necessary to facilitate and

encourage competition, but to otherwise get out of the way so the marketplace ultimately can

drive investment and determine winners and losers. Unfortunately, there have been trends in the

opposite direction, making harder for facilities-based providers committed to building modern

networks to compete as infrastructure investment resources get transferred from infrastructure

builders to facilities lessors in the form of price cuts and wholesale mandates. This type of

backward-looking regulatory fiat is a threat to the Commission’s ability to implement

recommendations in the National Broadband Plan to build the networks necessary for a fully-

connected America. It also threatens to delay unnecessarily the technology transitions to next-

generation networks employing high-speed fiber and IP-based technologies necessary to meet the

demands of the soon-to-be ubiquitous Internet of Things.

In that regard, we offer input on what types of regulations applicable to the operations or

activities of telecommunications service providers disserve broadband investment and

competition and are no longer necessary in the public interest as a result of meaningful economic

competition. We focus our comments on several broad categories of economic regulations as

they pertain primarily to incumbent LECs that make it harder and costlier for our members to

continue investing in broadband infrastructure, including regulations that encourage or facilitate

resale over investment.19 To be clear, we know that there is work beyond the focus of this filing

19 See Appendix, listing rule parts and sections that should be considered for repeal or revision.

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that the Commission can and should undertake to fully comply with its statutory biennial review

mandate.

First, we recognize that the former Bell Operating Company-dominated structure of the

telecom market regime has morphed into a competitive marketplace made up of intermodal

competitors, blurring the line between wireline, wireless, cable, and satellite networks and

services. Whatever advantages BOCs or “incumbent” LECs once enjoyed as monopolist

providers have long disappeared. Therefore, the Commission should take a critical look at any

regulation or requirement that references or singles out ILECs and BOCs from other local

exchange or other carriers or competitors for regulatory purposes. Labels from the 1990s and

earlier should not determine regulatory treatment. This would be consistent with the

Commission’s recent determination that ILECs are no longer dominant in the provision of

switched access voice services, resulting in the decision to no longer enforce requirements based

on dominant status.

Second, many of the Commission’s accounting, reporting, and recordkeeping regulations

are outdated and burdensome, and impose a costly burden without countervailing benefits on

price cap companies in particular as well as other providers. The Commission therefore should

examine them to determine if they continue to be relevant and necessary.

Third, the Commission recently claimed new and unprecedented authority to regulate the

internet by classifying all broadband internet access service (BIAS) and providers thereof as

subject to Title II, and by doing so undermined the incentives for large and small broadband

providers to continue investing in their networks. Apart from the open internet rules themselves,

the classification decision subjected providers to heavy-handed regulation that is ill-suited to the

dynamic internet industry, and was unnecessary as a result of significant competition among

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multiple BIAS providers. The Commission therefore should reexamine its recent flip to Title II

classification as a means to achieve its open internet goals.

Finally, the Commission should eliminate rules as necessary to improve efficiency,

consistency, and fairness in Commission processes. These would include tariffing requirements

from the early 20th century that unduly burden some but not all providers, and rules addressing

service discontinuances necessary for technology transitions.

II. THE COMMISSION SHOULD ELIMINATE ANY REGULATIONS THAT INHIBIT BROADBAND INFRASTRUCTURE INVESTMENT.

Chairman Wheeler recently observed that new entry by true facilities-based competitors,

“is bringing more competition – and that’s an outcome that needs to be encouraged.”20 We agree,

and providers have responded to increased competition by investing over $70 billion annually in

broadband, largely based on the belief that the new technologies they were investing in would not

be subject to onerous economic regulation. More regulation – especially regulation that

encourages resale over facilities investment – is unlikely to improve the competitive landscape

where meaningful economic competition already exists. In fact, more regulation will raise costly

barriers to investment and innovation that will harm real competition and will slow the transitions

to fiber, 5G wireless and other new technologies.

The Commission must therefore reject regulatory policies that encourage or facilitate

resale over investment. The Commission must also exercise regulatory restraint and embrace

policies that will lead to more, not less investment, as when it adopted policies limiting resellers’

use of very low-cost UNE facilities in competitive areas or for certain purposes, which was a key

factor in the race to build new fiber connections to cell towers that helped drive U.S. leadership in

20 Business Data Services in an Internet Protocol Environment, 31 FCC Rcd 4723 (2016), Statement of Chairman Tom Wheeler, at 1.

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the deployment of 4G wireless services.

A. The Commission Should Reexamine Monopoly Era-Driven Regulations That Apply Only to Bell Operating Companies and Incumbent Local Exchange Companies.

The label-based telecom regulation of the 1990s has not made sense for years and should

be ended. BOCs once universally enjoyed broad monopoly status in the provision of local

exchange services, and all the advantages (and responsibilities) that came with it. That is no

longer the case today. Due to consolidation and competition, the BOCs hold no competitive

advantages over their non-BOC counterparts in the provision of voice and data services.

Therefore, specific regulations applicable only to such providers and their successors by virtue of

their status as BOCs no longer serve a valid regulatory purpose.

Similarly, incumbent LECs have been subject to heightened regulation due to their status

as former monopolist providers of local telephone service. Both the 1996 Act21 and the

Commission’s rules22 impose additional requirements on incumbent LECs. The Commission

requires even more of such LECs that are deemed to be “dominant” providers of service.

Although the Commission recently removed the outdated designation of ILECs as “dominant” in

the provision of legacy switched access voice services,23 some dominant carrier requirements still

exist. Such disparate regulation may have been needed or justifiable in years past, but no longer

makes sense given the competitiveness of the telecommunications marketplace.

The Commission should examine all existing regulations that apply to providers solely by

virtue of their regulatory label as BOCs or ILECs to determine if they are no longer necessary in

21 See, e.g., 47 U.S.C. § 251(c). 22 See, e.g. 47 C.F.R. §§ 51.301-335 (Subpart D—Additional Obligations of Incumbent Local Exchange Carriers). 23 See Technology Transitions, et al., 31 FCC Rcd 8283 (2016) (Technology Transitions Declaratory Ruling & Order).

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the public interest as the result of meaningful economic competition from cable companies,

CLECs, wireless companies, VoIP providers, edge providers and other competitors. In other

words, where the facts do not justify continuing to single out a small number of service providers

by subjecting them to requirements that do not apply to their competitors, the Commission must

provide relief. In the same way that the Commission declared that the market for interstate

switched access services no longer enables incumbent LECs to exert market power or behave in a

way that is materially different from their competitors,24 the Commission should examine other

markets that exhibit competition among providers and grant the same relief.

B. The Commission Should Eliminate Costly and Burdensome Accounting, Reporting, and Recordkeeping Regulations.

Despite USTelecom and others asking the Commission to revise its accounting, reporting,

and recordkeeping requirements in several past biennial review proceedings, the Commission has

not yet fully modernized them to be consistent with how the industry has evolved.25 Many of

these now outdated requirements were necessary to police the actions of monopoly providers with

incentives to use their market power in a manner that undercut the ability of competitors to enter

and stay in the marketplace. They include requirements governing valuations of services and

assets, cost allocation, auditing, and reporting.

There is no question that every request for a provider to maintain certain records, undergo

periodic audits, or file a report on its activities involves a cost to the provider, and often times

(especially for small companies) that cost is high. The often complex requirements that are a

hallmark of the telecommunications industry require providers to develop and maintain expertise

24 Technology Transitions Declaratory Ruling and Order, ¶ 30. 25 The staff recommended that some but not all of these regulations be modified or eliminated as part of the 2012 biennial review. See Public Notice, 2012 Biennial Review of Telecommunications Regulations, DA 13-1708 (Aug. 6, 2013) (2012 Biennial Review PN).

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and expend substantial resources to ensure compliance. And every dollar spent on compliance

represents a dollar not spent on infrastructure investment.

Unnecessary accounting, reporting, and recordkeeping regulations are also a drain on

limited Commission resources. It is therefore imperative that only those regulations that serve a

legitimate regulatory purpose should be retained.

C. The Commission Should Reverse its Title II Classification of Broadband Internet

Service.

Competition in the provision of broadband internet access service (BIAS) is robust, and

consumers can choose between multiple modes and service providers for their broadband access

needs. In fact, until recently the Commission’s Title I approach led to the proliferation of

applications and devices for accessing and utilizing the internet. That in turn led to the massive

investment in infrastructure by multiple intermodal providers to accommodate consumers’ and

businesses’ demand for internet access. And today, wireline, wireless, cable, and satellite service

providers compete to provide BIAS in all areas of the country.

Despite competition and overwhelming evidence that Congress never intended BIAS to be

subject to heavy-handed, public-utility-style regulation, the Commission’s decision to classify

BIAS as a service subject to Title II regulation did just that. The Commission expressly refrained

from doing an economic analysis of competition in its Open Internet Order, which is exactly the

analysis that section 11 requires.26

Although the Commission did not codify its classification decision in the Code of Federal

Regulations, regulations need not be codified for the Commission to consider whether they still

26 See Protecting and Promoting the Open Internet, 30 FCC Rcd 5601, 5633 ¶ 84 (2015) (Open Internet Order).

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serve the public interest in the context of a biennial review. For example, the Commission

considered uncodified rules adopted in its Computer II and III proceedings as part of previous

biennial reviews.27 Therefore, the Commission may, and should as a policy matter, reconsider

whether its ruling in the Open Internet Order classifying BIAS as a Title II service is necessary in

the public interest given the state of competition for BIAS.28

D. The Commission Should Further Streamline and Repeal Other Regulations as Necessary to Improve Efficiency, Consistency, and Fairness in Commission Processes.

Tariffing Requirements. The Commission seems to be unable to move beyond its

telephone-era regulatory mindset with respect to tariffing requirements. Tariffs once served a

vital purpose in the monopoly era of telecommunications, and were necessary to ensure that

telephone carriers did not offer their services in a discriminatory manner. Fast forward to today,

where there is ample competition for local and long distance telephone services, although demand

for those services from providers that are still subject to tariffing has plummeted. Residential

customers have multiple choices for their local service provider, yet almost 75% forego

subscribing to traditional wired residential services at all, opting for wireless service or an IP-

based alternative instead. Business customers likewise have multiple options, and most negotiate

the terms and conditions of their service purchases rather than buy from tariffs.

Competition has brought into question the continuing utility of the tariffing regime. For

one, only a subset of providers has to file them, which gives an economic advantage to their

27 See 2012 Biennial Review PN at 7-8 (explaining that WCB staff noted that the Computer II rules and the uncodified comparably efficient interconnection and open network architecture (CEI/ONA) requirements that were adopted in the Computer III proceeding may no longer be necessary in the public interest as a result of competition as part of the 2006 biennial review). 28 See Open Internet Order at ¶¶ 306-433 (declaratory ruling that BIAS is a telecommunications service).

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competitors that have no tariffing requirements and thus can provide service under private

contracts that are exempt from regulation. Moreover, the Commission’s antiquated tariff filing

regulations are burdensome for the very group of carriers that has steadily lost market share over

the last decade and more as competition has grown. The tariffing regime is also a drain on

Commission resources, and thus contrary to the public interest and the Commission’s

modernization goals.

The Commission should consider whether existing tariffing regulations continue to serve

a useful purpose in today’s competitive marketplace. For some groups of carriers, including

small and rate-of-return regulated companies, tariffing may serve important functions. For

others, tariffs may not. Many of the Commission’s tariffing requirements are now permissive,

and those that remain mandatory may at times be used to facilitate arbitrage. The tariffing

requirements that remain are likely not necessary, and in some instances may be harmful because

they only apply to a small subset of providers. The Commission therefore should continue the

trend of eliminating or modifying existing tariffing requirements as part of this proceeding. For

example, the Commission could repeal mandatory tariffing for non-rate-of-return companies to

allow negotiated contracting, and seek comment to determine how a transition to contracting or

another alternative would work for rate-of-return companies.

Unfunded ETC Universal Service Requirements. In USTelecom’s Modernization

Petition,29 we asked the Commission to forbear from applying all remaining section § 214(e)

Eligible Telecommunications Carrier (ETC) obligations, where a price cap carrier does not

receive high cost universal service support, including the Commission’s determination that an

29 Petition of USTelecom for Forbearance Pursuant to 47 U.S.C. § 160(c) From Enforcement of Obsolete ILEC Legacy Regulations That Inhibit Deployment of Next-Generation Networks, WC Docket No. 192 (filed Oct. 6, 2014).

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ETC must provide the supported services throughout its service area regardless of whether such

services are actually supported with high-cost funds throughout that area.30 The Commission

denied this request31 and as a result, in the areas where the FCC has not already otherwise

granted forbearance, price cap carriers remain subject to the obligation to provide voice service

until they are replaced by an ETC that is required to provide voice and broadband services to

fixed locations or until they relinquish their ETC designations. Further, price cap carrier ETCs

remain subject to both Lifeline and state ETC obligations until they relinquish their ETC

designations through the section 214(e)(4) process.

By the FCC’s own calculation, affected carriers face more than $1 billion in annual

unfunded mandates because of this requirement. Moreover, it unduly burdens only one group of

carriers – price cap carriers – since other carriers applying for the first time to receive money

from the Fund can seek designation as an ETC and serve customers only in those areas where

they are awarded universal service funding. A petition for review challenging this rule has been

filed in the D.C. Circuit Court of Appeals,32 but the Commission should nevertheless reverse

this rule, which will cost affected carriers billions of dollars that otherwise would be spent to

invest in broadband infrastructure.

Technology Transitions-Related Requirements. The Commission should also review

its recent rules adopted as part of the Technology Transitions proceeding to determine whether

they are warranted in light of competition in the provision of both legacy and newer technologies

and services. The successful deployment of broadband technologies will rely in great part on the

30 See 47 C.F.R. § 54.201(d). 31 See Modernization Order, ¶ 101. 32 See Brief for Petitioners AT&T Inc. and CenturyLink, Inc., AT&T Inc. and CenturyLink, Inc. v. FCC, Case No. 15-1038 (D.C. Cir., filed Jul. 12, 2016).

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replacement of TDM-based switches and copper wire with fiber- and IP-based networks and

other facilities and technologies that are better suited to handle the feature-rich services that

consumers demand. But there is a tension between the need to transition and the desire to

preserve some legacy services and technologies that remain relevant to a small and shrinking

number of consumers. It is this tension that has led the Commission to adopt certain rules

purportedly to preserve essential regulatory protections, including competition, consumer

protection, universal service, and public safety until the transition is complete.33

In particular, a recent rule adopted to “streamline” requests for section 214 discontinuance

authority may have the opposite effect of impeding technology transitions by making providers

jump through unnecessary regulatory hoops when they only seek to upgrade and improve upon

their service offerings. The new, so-called “streamlined” process for ILECs seeking automatic

grant of 214 authority to discontinue a TDM-based voice service in connection with a technology

transition is anything but, to the extent that it adds requirements that were not previously

required.34 In particular, because competitive forces ensure that providers meet certain levels of

network infrastructure, network security, service quality, and service availability, the

Commission should eliminate them as requirements under the streamlined process. Similarly, the

consumer education requirements should be simplified to ensure only that impacted customers

are informed of their replacement service options and how to obtain such replacement services.

By finding in a declaratory ruling in the same document that ILECs are no longer dominant

33 See Technology Transitions Declaratory Ruling and Order, ¶ 3. 34 On the other hand, truly streamlining provisions like the one allowing automatic grant of discontinuance for a service that has had no subscribers for the previous 6 months should be retained. See 47 C.F.R. § 63.71(g). Providers, of course, may continue to use the existing procedures for discontinuances whether or not they involve technology transitions, while the new process only applies to discontinuances of services involving a wireline-to-wireless or a TDM-to-IP technology transition.

15

providers of switched access voice services because they no longer can exert market power, the

Commission has confirmed that legacy TDM-based voice services are subject to adequate

competition, so applications to discontinue such services should not be subject to these additional,

burdensome requirements. The Commission also should consider providing a similar streamlined

process for the discontinuance of data services.

The Commission should also reverse its declaratory ruling purporting to clarify that the

Commission will use a “functional test” to determine when a network change constitutes a

section 214 “discontinuance, reduction, or impairment of service.”35 As we have argued in a

petition for review filed in the D.C. Circuit Court of Appeals,36 this “clarification” impermissibly

redefines a carrier’s service to include not only the features it offers and provides to its end-user

and carrier-customers, but also the sometimes unknown uses to which those customers put the

service. This ruling has had the immediate effect of injecting uncertainty among providers as to

when they need to file a section 214 application for discontinuance, resulting in more providers

filing applications when they seek only to upgrade facilities and technologies in a way that does

not constitute a service change at all. The cost of filing a section 214 application can be

substantial, in particular for small carriers that may not routinely file such applications and thus

have to incur additional legal and staffing expenses when they do. By expanding the number of

instances in which companies will have to file applications under this new interpretation, the

Commission has unnecessarily increased costs, thereby creating additional burdens and delaying

technology transitions.

35 See Technology Transitions, et al., 30 FCC Rcd 9372, 9471 ¶ 182 (2015) (Technology Transitions Order on Recon). 36 See Brief for Petitioner USTelecom, USTelecom v. FCC, Case No. 15-1414 (D.C. Cir., filed Jun. 14, 2016).

16

Another requirement well-suited for elimination is the interim rule that ILECs seeking

214 authority to discontinue a TDM-based special access or a commercial wholesale platform

service must as a condition to obtaining authority provide to competitive carriers reasonably

comparable wholesale access on reasonably comparable rates, terms and conditions.37 As earlier

noted, there is significant competition for business data services. In addition to imposing a new

requirement on ILECs to provide wholesale platform services that are currently voluntarily

offered, this rule erects an unnecessary barrier to technology transitions and raises costs for

ILECs seeking to replace legacy services.

These requirements are not necessary in the public interest, given the meaningful

economic competition in all telecom markets, nor do the burdens they create outweigh any

purported benefits. For these reasons, the Commission should reverse these and any other

decisions that make it harder and more costly for providers seeking to make technology

transitions.

III. CONCLUSION.

Because competition is the driving force behind the requirement for the Commission to

review its rules affecting telecommunications service and providers, a clear-eyed, honest

assessment of the state of competition in telecommunications markets is an indispensable

component of this proceeding. Providers are using multiple platforms and types of facilities to

compete successfully for voice, video, and data telecommunications customers. Choices for these

services have increased from just a few short years ago, as prices have steadily declined – in other

words, the markets are competitive and working as intended. And USTelecom’s members and

other providers have responded by investing in their networks to ensure that their services stay

37 See Technology Transitions Order on Recon, ¶ 132.

17

competitive and continue to meet the needs of today’s telecommunications consumers. The

Commission must facilitate this virtuous circle of demand and investment by modifying or

eliminating any requirements that take away incentives for providers to continue to invest in and

build the world’s best broadband infrastructure.

Respectfully submitted, UNITED STATES TELECOM ASSOCIATION

By:

Diane Griffin Holland Jonathan Banks 607 14th Street, NW, Suite 400 Washington, D.C. 20005 (202) 326-7300

December 5, 2016

18

APPENDIX

Rules and Requirements to Review for Repeal or Revision Requirements for Bell Operating Companies and Incumbent Local Exchange Companies

Part 36 – Jurisdictional Separations Procedures; Standard Procedures for Separating Telecommunications Property Costs, Revenues, Expenses, Taxes and Reserves for Telecommunications Companies

Part 51 – Interconnection; Subpart D—Additional Obligations of Incumbent Local Exchange Carriers

Part 53 – Special Provisions Concerning Bell Operating Companies Part 59 – Infrastructure Sharing Part 64, Subpart G—Furnishing of Enhanced Services and Customer-Premises Equipment

by Bell Operating Companies; Telephone Operator Services Part 64, Subpart T—Separate Affiliate Requirements for Incumbent Independent Local

Exchange Carriers That Provide In-Region, Interstate Domestic Interexchange Services or In-Region International Interexchange Services

Accounting, Reporting, and Recordkeeping Requirements Part 32 – Uniform System of Accounts for Telecommunications Companies

Part 36 – Jurisdictional Separations Procedures … Part 64, Subpart I—Allocation of Costs Part 42 – Preservation of Records of Communications Carriers

Part 43 – Reports of Communications Common Carriers and Certain Affiliates Title II Classification of Broadband Internet Service Provider Services

Protecting and Promoting the Open Internet, 30 FCC Rcd 5601, ¶¶ 306-433 (2015) Tariff-Related Requirements

Part 1; Subpart E—Complaints, Applications, Tariffs, and Reports Involving Common Carriers, §§ 1.771 – 1.774 (Tariffs)

Part 61 - Tariffs Technology Transition-Related Requirements

Technology Transitions, et al., Declaratory Ruling, Second Report and Order, and Order on Reconsideration, FCC 16-90, 31 FCC Rcd 8283 (2016) Technology Transitions, et al., Report and Order, Order on Reconsideration and Further Notice of Proposed Rulemaking, FCC 15-97, 30 FCC Rcd 9372 (2015)