A new petition by US Telecom to the Federal Communications Commission for forbearance on mandatory competitor access to unbundled wholesale network elements is not unexpected.
Big facilities owners always argue that particular rules related to mandatory wholesale access create disincentives for them to invest in next-generation facilities.
Would-be competitors virtually always want both discounts and unbundled access, as they cannot afford to build their own facilities.
Among other issues, such rules always involve balancing incentives for investment with enabling more competition. US Telecom argues that almost all competition in the voice market now is facilities-based, which was the hope of backers of the Telecom Act of 1996.
Some 60 percent of U.S. households now use mobile for voice services, while 29 percent use cable TV or other facilities providers for voice.
Of households that do buy fixed network voice, about 55 percent buy from a cable TV or other facilities-based provider.
In business markets, at year-end 2016, telco share of business- and government-grade switched access and interconnected VoiP connections had fallen to 45 percent, down from 49 percent in 2015. Trends since then are likely unchanged, with competitors continuing to gain share.
Would-be competitors always argue they cannot compete effectively without such rules. The latest petition asks for relief on copper facilities wholesale access. Mandatory access rules for optical access already have been lightened.
The argument for mandatory wholesale (in the past with high price discounts) has been that such steps were necessary to allow competitors to enter the local access market and create the basis for further investment by such firms in their own facilities.
In practice, access networks are so expensive that it often is questionable whether new competitors can entertain “full market” investment in facilities. That is why most such investment has been to support business services in dense customer areas, or optical and other access facilities deployment for consumers only in parts of a city.
The specific rules generally relate to providing voice services. In 2000 some 186 million telco switched voice lines were in service. In 2018, there will be a projected 35 million telco lines in service.
In residential markets, only 11 percent of U.S. households are projected to have an ILEC switched voice line by the end of this year, US Telecom ays. Indeed, 60 percent of Americans will have abandoned wire line voice service entirely in favor of wireless alternatives.
Of the remaining 40 percent, a majority will obtain service from a non-ILEC- often a cable company or other provider of voice over Internet protocol ("VoiP").
Firms whose business strategies are based on access to unbundled network facilities (serving roughly two million voice lines, total) will oppose the rule changes, for obvious reasons.
Facilities owners will just as vigorously argue that the hoped-for facilities-based competition now is a reality.
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