In Box

America's Network, Nov 1, 2000

BROADBAND ERRORS

The response by Joan Engebretson in the "Broadband Questions" letter in your September 1, In Box was in error. Ms. Engebretson stated that the recent ruling by the Eighth Circuit Court requires unbundled network element prices to be based on actual cost, not forward-looking costs. In actuality, the Eighth Circuit's ruling upheld the FCC's use of forward-looking costs in pricing network elements. What the court rejected was the use of a hypothetical, most-advanced network to determine those forward-looking costs.

Forward-looking pricing methodologies, such as the FCC's TELRIC, examine the costs that an ILEC would incur on a going-forward basis to provide UNEs and interconnection. These costs can be based on either the ILEC's current network, a hypothetical network with the most efficient technology available, or a combination of both. The FCC's application of the TELRIC methodology relies on both existing and hypothetical network assumptions, namely: 1. ILEC's existing wire center locations; and, 2. the most efficient technology available in the industry, regardless of the technology used by the ILEC.

The Eighth Circuit held that the FCC's use of a hypothetical network violated the plain reading of the Telecommunications Act of 1996. The statute requires the rates for interconnection and UNEs be based on the cost of "providing the interconnection or network element." Because Congress used the term "the," the Court explained that this language requires rates to be based on the actual costs incurred by the carrier on a going-forward basis to provide the UNEs or interconnection, and not the potential costs if the carrier modifies its existing network to employ the most efficient technology available.

However, inherent in the FCC's forward-looking pricing methodology is the concept of recovering the incremental, rather than historical, costs of utilizing the ILEC's network. The court accepted the FCC's argument that TELRIC may disregard historical costs in determining how much carriers should be reimbursed for the use of their network. The Court explained that the word "costs" in the Telecommunications Act of 1996 is ambiguous, thus legal doctrine requires the Court to defer to a reasonable interpretation by the FCC. The agency interpreted the word "costs" to mean incremental rather than historical costs. The Court found this interpretation to be reasonable.

John Garvey
Regulatory Research Associates, Jersey City, N.J.

HOW MANY NAPS DOES MIAMI NEED?

Just wanted to let you know that all of Miami is abuzz over the Sept. 1 edition of America's Network ranking of Miami as the number five telecom city in the world.

It's been mentioned at several meetings of the Greater Miami Chamber of Commerce; the Miami Herald ran a story on the front page of their business section and a host of other regional business publications have included it in their stories.

I noticed that the ranking was based on a study by the Advanstar Telecom Group and mentioned that a NAP was a key ingredient that helped Miami move up in the rankings.

There is a project by the name of the Miami International Infocom Center, scheduled to be completed by late 2001, that many industry analysts are not familiar with. This telecommunications project will feature 1.2 million square feet in addition to a NAP.

Richard Gibbs

HUB HUBBUB

The description of the 5th ranked hub ("Rating the world's top 20 telecom hubs," Sept. 1), located in Miami, mentions the NAP of the Americas initiative. The information provided on the topic is inaccurate, perhaps because there have been some significant changes to the structure of the NAP from the time the feature was researched and the time it was published.

Currently there are two independent NAP projects in Florida, one headed by BellSouth and one formed by a coalition of 47 telecom companies, including AT&T and Global Crossing. The latter effort is being led by EPIK between the initiative's partners. Also, contrary to what was printed, a network operator has been chosen to manage the NAP.

Frederico Brigatti
Golin/Harris New York, New York, N.Y.

For more information on EPIK's Miami NAP project, see "Not caught NAPping" on page 22 this issue.

AW, SHUCKS

I have been meaning to congratulate you for some time on the editorial improvement to America's Network since Grahame Lynch and the new editorial staff have taken over there. The quality of the content is much improved. I certainly noticed a difference, and I'm sure many others did as well. If you wish, please pass along my compliments to the whole staff.

Bob Mastin, President
Aegis Publishing Group Ltd., Newport, R.I.

FATE OF THE FCC

I was interested to read your intensive coverage on the election and the effect it will have on telecom policy (Oct. 1, America's Network).

Whatever happens, I find it difficult to believe that the FCC will continue to have the influence it currently enjoys. With the telecom industry changing as fast as it is, they cannot continue to block mergers such as Sprint and WorldCom. Don't they realize that companies such as those two have to merge to fight off the newer competitors without legacy infrastructures and customer bases?