4. CALTEL has not Provided Evidence to Justify its Proposed Rules
As discussed above, the FCC rejected proposals for "extensive rules that would require affirmative regulatory approval prior to the retirement of any copper loop facilities," and noted that such a requirement is not necessary because its existing rules "serve as adequate safeguards."23 We agree with this approach. The FCC determined not to prevent copper retirement based on its policy to promote advanced services and the networks supporting such services. We believe that imposing a substantial and onerous process for approving copper retirements would delay fiber system deployment without providing major benefits to competition or consumers. The decision we make today represents a careful balance between policies of this Commission: encouraging the rapid deployment of high speed telecommunications services to all Californians consistent with Section 709 for economic development purposes against ensuring fair competition and uninterrupted service for CLEC retail consumers.
Neither CALTEL nor any other commenter in this proceeding has provided evidence of harm justifying rules such as those CALTEL proposes.24 While TURN supports CALTEL's request that we adopt rules, it acknowledges a "lack of data" showing that problems currently exist.25 We find that hypothetical problems do not provide a basis for new regulations in this highly competitive area of telecommunications service. The California legislature in 2006 enacted DIVCA26 to encourage ILECs to build fiber systems that would support video services in California. This Commission believes that requiring an ILEC to maintain its copper network for its competitors would be inconsistent with the intent of DIVCA. Copper retirement rules could provide a disincentive for carriers to bring advanced communications systems to our state, as opposed to other states with a more favorable regulatory climate. This outcome would conflict with the desire of our state legislature and this Commission to ensure that California's communications systems be as advanced as possible.
CALTEL's rules would require that an entity seeking to retire copper facilities file an application with the Commission and make a showing that the copper removal would serve the public interest, convenience and necessity, among other requirements.27 The rules would prohibit ILECs who could not meet this test from retiring the facilities, perhaps indefinitely. These proposed rules also would delay retirement of copper facilities by a number of months should a CLEC protest the regulatory application.
Such rules would be contrary not only to the FCC's intent in the TRO, but to our own state's policy as expressed in Section 709 to advance the installation of high speed networks. As noted previously, no ILEC participating in this proceeding is currently retiring copper loops. Verizon's removal of copper drops does not constitute retirement so long as it replaces the drops upon request.
Despite the absence of current harm, CALTEL asks us to act proactively to preserve the copper network. DRA, FEA/DOD and TURN concur. The ILECs, in contrast, assert that the proposed rules are unnecessary in light of the FCC's existing rules and CALTEL's failure to demonstrate harm.
As we discuss below, implementing rules governing the retirement of copper loops could require an extensive and complex examination of who will bear the cost of maintaining a network an ILEC no longer needs. CALTEL and the ILECs have vastly different opinions about how to calculate such costs and who should bear them. Moreover, CALTEL itself has noted that its members are not interested in acquiring the copper network from the ILECs. The FCC has effectively declined to require ILECs to provide the copper loop as a UNE if ILECs are replacing the copper loop with FTTH or FTTC facilities. In the absence of a clear FCC requirement that the copper loop remain as a UNE under such circumstances, we are reluctant to adopt an extensive approval process for the ILEC to retire its copper facilities when it deploys FTTC or FTTH facilities.
Further, the record shows that copper is currently not being removed on a large scale and that the ILECs' deployment of all-fiber networks is limited to date.28 While Verizon and AT&T have both announced plans to increase the pace of their fiber network build outs, all-fiber networks are still the exception rather than the rule in California.29 Verizon's fiber-only FiOS network is far from ubiquitous and AT&T's fiber network is still copper dependent.30
CALTEL's proposed rules would place a heavy burden of proof on ILECs to prove that removal of copper facilities is in the public interest. We note that the FCC adopted these copper loop retirement policies in the TRO after weighing the costs and benefits of unbundling and intermodal competition that the ILECs face from non-ILECs in the voice area, and in considering how to advance its goal of "swift and ubiquitous broadband deployment."31 We support these policies and believe that existing FCC notice requirements provide an adequate mechanism for CLECs to transition during an ILEC's copper retirement.
The FCC specifically established notice requirements (as discussed below) that would "ensure that incumbent and competitive carriers can work together to ensure the competitive LECs maintain access to loop facilities." The FCC thus anticipated that the carriers would work to maintain loop facilities access. We expect that the ILECs will work in good faith to provide such access to their wholesale CLEC customers.
The FCC also stressed that it was not eliminating the rights of competitive carriers "to obtain unbundled access to hybrid loops capable of providing DS1 and DS3 service to customers."32 Balancing our policy goals to promote advanced broadband services in the state with the interests of competitors to have access to network facilities, we strongly encourage the affected ILECs to coordinate and work with the CLECs to ensure that CLEC service is not disrupted if an ILEC seeks to retire a copper loop. We will look closely to ensure anticompetitive actions do not adversely affect CLEC services to end users.33 Therefore, we will not take the action CALTEL urges, given the complexities involved in determining the future costs of maintaining access to copper facilities; the lack of proof of harm; lack of actual removal of copper facilities or plans to do so; and the limited deployment of fiber networks to date.
We will instead as outlined below adopt a state process for ILECs to file notices with the Commission and serve notices on CLECs; and to foster commercial negotiations between the parties. We will also monitor advances in technology that may eliminate CLEC reliance on copper local loops.
23 TRO at ¶ 281.
24 Indeed, by asking us to preserve the status quo pending the outcome of this rulemaking, CALTEL essentially concedes that the current situation poses no harm.
25 TURN Reply Comments at 11 ('TURN submits that the lack of data is one reason that establishing copper retirement rules is important.").
26 Pub. Util. Code § 5800 et seq.
27 Id. at 2.
28 See AT&T Opening Comments at 27; Response of The Division of Ratepayer Advocates on Order Instituting Rulemaking, R.08-01-005, filed May 28, 2008 (DRA Reply Comments) at 2-3; Response of Dr. William E. Taylor prepared for AT&T California on Order Instituting Rulemaking, R.08-01-005, filed May 28, 2008 (AT&T's Expert Reply Comments) at 9. See also Comments of Small LECs on Order Instituting Rulemaking, R.08-01-005, filed March 14, 2008 (Small LECs' Opening Comments) at 7.
29 CALTEL Opening Comments at 19, Response of AT&T California to Order Instituting Rulemaking, R.08-01-005, filed May 28, 2008 (AT&T Reply Comments) at 32, DRA Reply comments at 2-3. See also Response of Small LECs to Order Instituting Rulemaking, R.08-01-005, filed May 28, 2008 (Small LECs' Reply Comments) at 3; AT&T's Expert Reply Comments at 12.
30 See CALTEL Reply Comments at 16-17. While CALTEL introduced evidence in comments on the proposed decision in this proceeding that AT&T is now installing fiber-only networks in two small California cities ("AT&T issued two Accessible Letters, and published two short term network changes notices on its public Internet site, in July describing plans to replace copper feeder cable with fiber-fed DLC (digital loop carrier) systems in the Downieville and Watsonville areas later this year"), these replacements of copper are not part of a FTTH or FTTC deployment and therefore, outside the scope of the FCC's TRO rules governing copper loop retirement. See CALTEL Opening Comments on Commissioner Chong's Proposed Decision, filed August 25, 2008, at 11.
31 TRO at ¶ 234.
32 See TRO at ¶ 294.
33 On the other hand, if a CLEC fails to submit a request for negotiations to the ILEC in a timely manner, this Commission will not provide a forum for any later dispute.
