10 November 2003 Cedar Knolls, NJ Lightwave--The Federal Communications Commission (FCC) intends to review total elements long-run incremental cost (TELRIC) pricing rules and their effectiveness. TELRIC, which has been upheld by the Supreme Court, uses forward-looking costs to determine prices charged to competitive local-exchange carriers (CLECs) for use of specific unbundled network elements (UNEs). Incumbent local-exchange carriers (ILECs) claim they are losing $9 for each line provisioned as an unbundled network element.
Meanwhile, CLECs argue that they should not have to pay for past mistakes in infrastructure investment made by the ILECs. The ILECs counter that the cost to replace their existing copper-loop networks would be astronomical. An argument can be made however, that any network replacement taking place today would use technology that is much less expensive to deploy. It is the FCC's task to derive a pricing method that permit the ILECS to recover implementaion costs without placing undue burden on CLECs.
Underlying the TELRIC fight is the fact that ILECs have begun to lose access lines to intermodal competitors. Mobile phone usage is eroding the traditional landline business of the ILECs. ILECs feel that FCC mandated pricing only undermines their business while granting an advantage to long distance operators with no local assets to maintain.
Probe Financial Associates' new report, "The RBOCs and TELRIC: The Fight to Stem Line Loses" examines the FCC's role in regulating the ILEC's local service infrastructure.