[Congressional Record (Bound Edition), Volume 149 (2003), Part 14]
[Extensions of Remarks]
[Page 19903]
[From the U.S. Government Publishing Office, www.gpo.gov]




       ON THE FCC'S RULING CONCERNING UNBUNDLED NETWORK ELEMENTS

                                 ______
                                 

                           HON. BOB GOODLATTE

                              of virginia

                    in the house of representatives

                         Friday, July 25, 2003

  Mr. GOODLATTE. Mr. Speaker, when Congress enacted the 
Telecommunications Act of 1996, it created three ways to spur 
telecommunications competition--the interconnection of competing 
networks, use of parts of competitors' networks, called unbundled 
network elements (UNEs), and the resale of the incumbents' retail 
services. Congress intended that UNEs and resale, or wholesale, prices 
be set to equal the retail cost, minus the avoided costs of not having 
to sell to the public, such as advertising.
  However, when the Federal Communications Commission wrote the rules, 
it set rates for UNEs at a bizarre below-cost rate called TELRIC. 
Furthermore, the FCC allowed competitors to put all the UNEs together 
into a platform, called UNE-P. For all intents and purposes, UNE-P and 
resale are the same product. While the Congressionally mandated rate 
for this service amounts to about a 20% discount, the FCC-created UNE-P 
price can have a discount of up to 55%.
  In February, the FCC reviewed its UNE rules and decided to keep the 
current UNE-P regime for the mass market. This was an unfortunate 
decision. Business plans built on regulatory arbitrage rarely last, 
they witness reciprocal compensation and are certainly not going to 
create new investment and new innovation. If the FCC wanted a truly 
competitive telecommunications market, based on sound economic 
principles, with strong companies and resulting jobs, it should have 
eliminated the UNE-P regime for the mass market in February.

                          ____________________