Below is the "Introduction and Summary" of the comments. A PDF of the full comments with footnotes is available here.
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Introduction and Summary
These comments are submitted in response to the Commission's request for comments on USTelecom's petition asking the Commission to declare that incumbent local exchange carriers (ILECs) are no longer presumptively dominant when providing interstate mass market and enterprise switched access voice services. We urge the Commission to act promptly in this proceeding. Reclassification of ILEC switched access services to non-dominant status is well overdue, and consumers will benefit from such reclassification.
Long gone are the days when consumers had only one choice for interstate voice services. Publicly available data amply demonstrates the dynamic change that has taken place in the voice services market in the 30-plus years since the dominant carrier regime was established. In the last decade, technological breakthroughs have only accelerated the ever-increasing level of marketplace competition. Cross-platform competition from wireless and cable providers has coincided with increasing adoption of IP-enabled technologies and the transition away from copper-based switched access networks.
While static indicators cannot adequately capture the dynamism of today's market, even viewed through static lens, voice services are demonstrably competitive. For example, the percentage of households subscribing to ILEC switched access services has dropped from 93% of all households in 2003 down to less than 33% today. Future decreases in ILEC market share are anticipated. VoIP service is expected to exceed 52% of all wireline households. And even by conservative estimates, 34% of all households already rely exclusively on wireless for voice services, a figure that keeps climbing.
There is no evidence of market power problems warranting continued enforcement of dominant carrier regulations. The old assumptions of a monopolistic environment upon which dominant carrier regulation of ILEC switched access services was based have surely disintegrated. This erosion compels a declaration that ILECs should no longer be presumed dominant when providing interstate mass market and enterprise switched access voice services.
Adherence to rule of law principles demand that where evidence overwhelmingly indicates that regulations have outlived the factual assumptions on which they were based, those regulations should be speedily removed. Dominant carrier regulation of ILEC switched access services is no longer justified. It is therefore inequitable and arbitrary to enforce those mandates. Extending enforcement through ad hoc rationales likewise involves an abuse of agency authority.
Agency precedent also favors reclassifying ILEC switched access services as non-dominant since conditions are even more competitive than when the Commission previously has granted similar relief. Concerns over regulatory parity are also relevant, since ILECs' market competitors are subject only to non-dominant carrier regulation.
As importantly as anything else, unnecessary legacy regulations impose compliance costs and result in economic dislocations that, ultimately, harm consumers. Absent demonstrated market power or consumer harm, free market competition should prevail as the means for delivering goods and services to consumers in the most efficient, least costly manner. Dominant carrier regulation increases carriers' compliance costs, and this, in turn, makes the ILECs' services more costly. The dominant carrier regulatory requirements at issue here, including the stringent tariff filing requirements, impede the swift development and implementation of new service offerings. Moreover, relieving ILEC switched access services from the compliance and opportunity costs attending to dominant carrier regulations can free up investment for next-generation networks and accelerate the ongoing transition to all-IP networks.
Finally, we wish to emphasize, as we have so often previously, that there are many other desirable deregulatory actions - cutting across the various service categories - which the Commission should undertake as well as this one. Whether by issuance of a declaratory ruling, as in this instance, or by grant of forbearance petitions or waivers, the Commission should continue removing outdated regulatory barriers without delay.
