Looking Back: The Telecom Year In Review

Telecom Policy Report, Dec 22, 2004

The Whos, Wheres, Whens, Whats And Whys That Shaped 2004

There was something for everyone in 2004 when it came to regulatory and legislative issues: mergers, acquisitions, resolution of court cases, incumbents versus competitive carriers, the take-off of disruptive technology and the push by decision makers to treat new entrants with a light touch as they struggle to create their places in the market. There were definite winners and losers, plenty of saber rattling, whispers of yet another round of telecom reform on Capitol Hill, power struggles at the Federal Communications Commission, surprise alliances and alleged smoke-filled-room negotiations.

Telecom Policy Report was there for all of it. From our perspective, the year started with a bang and ended with the shot heard across the industry - the ruling freeing incumbent carriers from sharing their lines, in many instances, with competitors. It is this one issue that sets the stage for what certainly will be a whole new spate of litigation in 2005.

With the tentative solution to the unbundled network element (UNE) battle ranked as TPR's Number One story of the year, here is the rest of that Top 10 list: (2) the rise of voice over Internet Protocol (VoIP) and its related legal implications; (3) the merger of AT&T Wireless and Cingular, which bumped Verizon Wireless off its top-ranked perch; (4) municipalities entering the fiber-to-the-premise (FTTP) arena and those that wanted to stop them; (5) the adoption of Nextel's controversial consensus plan to re-band spectrum to favor first responders (and, some may say, Nextel itself); (6) the ongoing debate on whether Internet services should be taxed; (7) the almost guaranteed revisitation of the Telecommunications Act of 1996; (8) access-rate reform; (9) the introduction of an industry-formulated intercarrier compensation plan set to reform the old system; and, finally, (10) the surprise marriage of Sprint and Nextel, much to Verizon's dismay.

There is history behind all of these stories and others that did not make our Top 10. In this last issue of the year, the editors of TPR present, in a much-abridged form, our Telecom Year In Review.

January

* A federal district court in Kentucky upheld an arbitration decision by the state's Public Service Commission (PSC) ordering BellSouth to provide digital subscriber line (DSL) technology over a platform of unbundled network elements (UNE-P) at wholesale rates to competitive providers of Internet services. If the Kentucky ruling holds up under further appellate review, incumbent telcos like BellSouth and Qwest that currently dominate much of the market for Internet access in rural America no longer will be able to bar competitors from access to their DSL-capable local networks. In fact, the ruling could further open the doors for the advancement of Voice over Internet Protocol (VoIP) into rural America.

* Early in the month, the Indiana Utility Regulatory Commission (IURC) issued an order that allowed SBC Indiana to raise its wholesale rates for a platform of unbundled network elements - also known as UNE-P - by about 30 percent and causing AT&T, the nation's largest competitive local exchange carrier (CLEC), to consider withdrawing from the Indiana market altogether. According to the IURC's order, the final metro loop figure approved by the commission differed from both the 175-percent increase sought by SBC Indiana and the 60-percent decrease requested by AT&T and the other CLECs.

* After more than three years of arguments up the judicial food chain, the U.S. Supreme Court ruled neither CLECs nor the customers of CLECs can bring federal antitrust actions against the ILECs simply because they fail to live up to their obligations under the 1996 Telecom Act. Verizon v. Trinko LLP stemmed from a complaint originally filed by a New York law firm against what was then Bell Atlantic, now known as Verizon. In that case, the law firm of Curtis V. Trinko LLP said Verizon engaged in anti-competitive conduct that resulted in Trinko receiving inadequate telephone service from a CLEC, i.e., AT&T.

In May 2001, the U.S. Court of Appeals for the 2nd Circuit reversed part of a lower court's ruling that dismissed the case on grounds that Trinko did not have the right to bring an antitrust action against Bell Atlantic. The appeals court disagreed, and Verizon eventually settled the claim brought by AT&T against Bell Atlantic, but Trinko, which said it was without telephone service for some weeks while AT&T and Verizon worked out their differences - decided to bring its own action against Verizon. It lost.

* A large group of Utah municipalities was added to the growing list of localities that are not waiting to see whether the ILECs intend to keep their 2003 promise of massive fiber-to-the-premises (FTTP) deployment. Eighteen Utah cities entered into a joint agreement to construct a $470 million FTTP system called UTOPIA (an acronym for Utah Telecommunications Open Infrastructure Agency). UTOPIA could serve nearly 250,000 households and 34,500 businesses with access speeds of 100 megabits per second and a monthly cost of $28 per subscriber. Qwest and Comcast, of course, opposed the model.