USTelecom Forbearance Petition Information (URGENT)


This page explains what the USTelecom Forbearance Petition is about and the devastating impact it would have on competitive Internet and telephone providers if the FCC grants it.  Depending whether and to what extent this petition is granted, it could have a significant negative impact on Raw Bandwidth and other competitive providers' new service activations and costs early next year, and affect currently active customers' services by early 2021.  The petition, if substantially granted, is almost certain to result in a reduction in coverage area and an increase in costs to competitive ISPs and their customers! We recommend reading all sections of this page before filing comments at the FCC in support of competitive providers and urging denial of this petition, which is what we're encouraging you to do.  If you have any questions, please email support@rawbw.com.


Update 9/7/18: Formal reply comments have been filed in the FCC docket.  Even though the 9/5/18 date has passed, it's still worthwhile for consumers and businesses to file informal comments that this web page discusses and directs you how to do, so if you haven't already, please go ahead.  If you've already sent/filed comments, thank you very much for supporting us and other competitive providers!  It will be some time before we have a decision from the FCC, but I'll keep you posted here.


Click each question to expand for its answer:

What does the USTelecom Forbearance Petition refer to?

In early May 2018, USTelecom filed a petition at the Federal Communications Commission (FCC), asking the FCC to forbear from enforcing portions of the Telecommunications Act of 1996 (TA96).  USTelecom is a trade group of Incumbent Local Exchange Carriers (ILECs) which are the main telephone companies in each service area around the country; its largest ILEC members are AT&T and Verizon, and USTelecom is basically their lobbying group.  The Telecommunications Act of 1996 (TA96) is the current state of the law governing phone companies in the United States, and was a major amendment to the existing Telecommunications Act in order to open up telecommunications to competitors.   It's entirely because of TA96 that competitive DSL and Ethernet over Copper providers, as well as competitive local phone companies, are able to exist.  The FCC is the administrative body of the US Government whose responsibility includes writing and enforcing the regulations to implement the Telecom Act.


By asking for "forbearance", USTelecom (and by extension AT&T) is asking the FCC to no longer enforce at all certain sections of TA96 that are critical for competitive Internet providers to reach many of their customers.  The FCC is currently taking comments on the petition; competitive providers like Raw Bandwidth have already filed opening comments, and reply comments will be filed by September 5th.  Less formal comments/letters from customers of competitive providers and other interested parties are still being accepted and it's hard to say until how long they will be considered, but filing your comments by September 5th is encouraged.  Even if you are a customer of the incumbent providers, you should be concerned with having strong competition to help keep pricing in check and service quality higher, as well as to drive innovation such as faster speeds.  Without sufficient competition, the incumbent providers are not incentivized to invest in their networks, only to extract as much revenue from their customer base while minimizing their own expenses including capital investment. How to file comments in support of competition and urging denial of this forbearance petition is described below.

    What regulations is USTelecom asking the FCC to stop enforcing?

    USTelecom is asking the FCC to stop enforcing a number of sections of the Telecommunications Act of 1996 (TA96), but the most critical ones for Raw Bandwidth and other DSL and Ethernet over Copper (EoC) providers are Title 47 United States Code sections 251(c)(3) and 251 (c)(4).  The FCC issues more specific regulations related to these statutory code sections (passed by the federal Congress and President in 1996) which are then published in the code of federal regulations (CFRs), and over the course of time the regulations get updated even in areas where the statute itself remains the same since 1996.  If forbearance is granted as requested in the petition, the FCC and incumbent phone companies would essentially void these statutory obligations and associated regulations and treat them as if they do not exist.


    Section 251(c)(3), referred to as the "unbundled network elements" (UNEs) obligation, requires the incumbent phone companies to separate out certain discrete network elements and rent them to competitive providers at regulated rates.  The list of unbundled elements has been whittled down a fair bit over the years from prior forbearance and regulatory reviews; for example in 2004, the FCC decided that incumbent providers would not have to share any fiber network to customer locations, in order to encourage them to deploy more fiber.  The most critical remaining UNEs for providers like Raw Bandwidth are renting of the copper wire pairs that connects from the phone company (AT&T) central office building through the streets underground and on poles to residence and businesses served by each of AT&T's buildings, known as the "2-wire loop UNE" in order to carry DSL and Ethernet over Copper (EoC) signals, and to rent strands of dark fiber optic cabling to connect our equipment in one AT&T building to our equipment in another AT&T building, known as the "dark fiber transport UNE."   Raw Bandwidth's and other competitive providers rental of UNEs from AT&T and the other ILECs is not free--we pay for them at regulated rates which are established by each state's utility commission, in our case the California Public Utilities Commission, using a methodology prescribed by the FCC known as Total Element Long Run Incremental Cost or "TELRIC".  TELRIC is based on an analysis of what it costs the incumbent provider to provide the element efficiently; incumbent providers do not take a loss on the network elements they sell to competitors under the regulations, but they are not allowed to charge as much as they'd like and would charge as a monopoly if the prices weren't regulated.


    Section 251(c)(4), referred to as the resale obligation, requires incumbent phone companies to resell many of their retail services to competitive providers at an "avoided cost discount", which is basically a discount equal to the cost the incumbent provider avoids incurring by not having to market and bill retail customers for the service resold to the competitor, similar to a commission they might pay to an outside sales rep.  The competitive provider often combines the service purchased at the avoided cost discount with other services of the competitive provider's own to create a new product, not just resells the incumbent's service without change.  Most of the services subject to the resale obligation are voice telephony services and private line data transport services; the incumbent provider's retail Internet access services are not subject to the resale obligation, and Raw Bandwidth doesn't resell you an AT&T Internet service, we build up our own service using 251(c)(3) UNEs and our own equipment and upstream Internet access.  Some providers of Internet access do resell AT&T's Internet access, either exclusively or in areas where the competitive provider can't deliver their own service, but any resale of AT&T's Internet access in the marketplace is occurring under voluntary commercial agreements, not due to any mandate in the Telecom Act  Raw Bandwidth doesn't currently resell or use any resold incumbent services in its products, but looks to resale of private line service in order to potentially use private line services to connect business customers to our Internet access network, or for our own backbone needs, and many competitive providers use resale services extensively so we support the continued availability of resale.


    In addition to the two sections cited above, Raw Bandwidth and other competitive providers rely on the collocation obligations of Section 251(c)(6), which is what allows us to place our DSL and other networking equipment inside of AT&T's central office buildings--the buildings at the other end of the 2-wire loops, which is necessary to be able to connect to the wires for the purpose of reaching our customers.  On its face the USTelecom Forbearance Petition doesn't ask the FCC to forbear from section 251(c)(6), but in practical effect, if forbearance is granted some of our central office collocations may not be sustainable especially due to loss of the dark fiber UNE to connect them to the rest of our network where no competitive options exist.   Like unbundled network elements, we pay rent for space and the cost of power and cooling inside of AT&T's central office buildings using rates established by the California PUC who applied the FCC's TELRIC methodology.

    How does Raw Bandwidth use the network elements at issue and what would the effect be if the petition is granted?

    Raw Bandwidth's primary means of reaching residential and small business customers is via DSL.  To provide the DSL and Ethernet over Copper (EoC) services on our CLEC platform, we rent space from AT&T inside their central office (CO) buildings to place our DSL and EoC equipment, and then rent individual pairs of wire (2-wire loop UNEs) to reach our customers at their specific address after they place an order for service (2 pairs for bonded DSL, sometimes many pairs for Ethernet over Copper).  AT&T's role in this is to provide us with the barest of network elements, literally a pair of small twisted pair copper wires, that depending on location can be up to 2 miles long, to connect our equipment to the customer's premise.  Of important note, this 2-wire loop medium is a natural monopoly--in any given area, only the ILEC like AT&T owns this type of wiring in the street, and it's impractical and economically inefficient for each competitor to duplicate it.  We pay AT&T to rent the space in the central office, as well as the individual pairs of wire, at regulated rates based on the cost to provide these elements.  The rate regulation is especially important because the elements are monopolies and there are no competitors we can choose to buy these elements from in order to keep our costs in check. If the USTelecom petition is granted as requested, there would no longer be any effective rate regulation, and AT&T would at minimum raise the rates substantially, but could also decline to offer the network elements to competitors at any price even while they use the 2-wire loops to provide their own services.


    We also use the 2-wire loop UNE indirectly to service some customers.  For example at two projects in San Bruno, the Shelter Creek and Peninsula Place condominium projects, we use Ethernet over Copper (EoC) links to connect on-site DSL equipment, and then use only inside wiring owned by the homeowner's association (or for parts of Peninsula Place put in by Raw Bandwidth), to connect to individual subscribers.  In this way we are able to provide faster speeds by shortening the length of wires that the DSL is running over, and we don't have to involve AT&T to add or change individual subscriber connections.


    Aside from the 2-wire UNE loops, we also rent dark fiber transport UNEs to connect our equipment in 18 different AT&T buildings where we have a presence together.  The FCC's rules also provide that this network element be provided at regulated rates, subject to certain restrictions on its availability, even though the rules don't require AT&T to rent us fiber strands to customer locations.  If the USTelecom petition is granted as requested, we anticipate that AT&T will no longer offer the dark fiber element at all, but instead would only offer "lit" services (rather than dark fiber) at specific speeds and much higher cost, driving up costs we have to recover from our customers via our retail service rates, as well as taking away some of the control we have over reliability by lighting the dark fiber ourselves.  In addition to these two UNEs which we use extensively, we also add some network elements we obtain under commercial agreements from other providers such as to connect from our network inside of AT&T COs to the data center where we rent space to house servers and pick up our connections to the Internet.   When you get our service, the Internet access is our own, and on our CLEC network all of the networking equipment used to deliver the service to you other than the physical wires through the street are owned and operated by us, so we're not reselling you AT&T's Internet service, it's distinct and built up using minimal passive elements (transmission mediums) obtained from AT&T.


    The petition requests that the FCC forbear from the regulations that, among other things, require AT&T to rent us the 2-wire loop UNE and the dark fiber transport UNE at regulated rates.  If forbearance is granted as requested, we will certainly see increased costs and likely would see a reduction in coverage area as well.  Grant of the petition would have a nearterm effect on cost and availability of new connections including existing customers trying to move service.  Longer term even service and costs to many existing customers would be affected.  The lack of rate regulation that would result if forbearance is granted is a real problem especially because of the monopoly status of the 2-wire loop--competitive providers don't have any negotiating leverage with the ILECs.


    There are some exceptions to the effects by virtue of the way we operate.  At Shelter Creek and Peninsula Place which I mentioned above, we'd continue to be able to add new customers without impact because we only use inside wiring directly to service customers, and we have been working to upgrade our backhaul to much faster speeds in a way that wouldn't be affected by the petition (naturally, not as a response to the petition) in order to increase the speeds we can offer subscribers anyway.


    It's important that we and other competitors get support from as many customers as possible in the form of comments to the FCC, even if you as a specific customer won't be directly impacted.  Our deployment into AT&T's central office buildings with DSL and Ethernet over Copper equipment represents a significant investment we've been making since 2011, and we are still earning it back.  Grant of this forbearance petition would devalue that investment, and reduce net revenues we need to earn back the sunk costs as well as to invest in new projects that don't depend as heavily on AT&T's facilities.  We are eyeing more projects like Shelter Creek and Peninsula Place, with faster speed targets, as a means to viably stay relevant as a smaller provider, using carrier grade fixed wireless and fiber for backhaul, and watching some of the emerging carrier-grade multipoint wireless systems to offer fixed wireless service to smaller apartment buildings and single family homes where we can.


    What are USTelecom's arguments for why they think the FCC should forbear from these regulations and why are they wrong?

    In their petition, USTelecom's primary argument is a claim that the use of UNEs by competitive providers has declined, it costs them money to comply with the regulations, and if relieved of the regulations they will raise rates on competitors and invest part of the extra money they make into deploying more fiber optic network.  They also claim that consumers will see lower rates by shutting down competition.  There are a number of problems with their arguments that competitive providers are detailing to the FCC, but here's a few:


    1. USTelecom submitted an economic study with their petition without detailing their methodology, but even with the information they did provide, a number of flaws are exposed with how they manipulated the data to get their results.  They made assumptions about speeds delivered over 2-wire UNE loops that they cannot possibly know from the data available to them. They then averaged questionable speed data inappropriately, seem to be trying to use voice competition statistics to show a substantial decline and switch to wireless, and brushing aside competition in data services generated by competitive providers use of UNEs, including pretending that Ethernet over Copper is a separate market from Ethernet over Fiber, when in reality EoC competes directly with Ethernet over Fiber to speeds of hundreds of Mbps.  Generally the cost study is built on questionable assumption layered on top of assumption.


    2. Even ignoring the flaws in USTelecom's cost study itself and taking their conclusion at face value, they claim that granting forbearance will result in up to $182 million per year of increased capital investment (across all providers including non-ILEC competitors) into fiber optic and other advanced technology deployment increasing its availability.  But AT&T and Verizon's own capital investment in 2017 alone totaled more than $38 BILLION.  USTelecom would like the FCC to cut off competitor access to copper wiring still being used by competitors and incumbents alike in order to increase capital spending in the telecom industry by less than 1/2 of 1%.


    3. USTelecom claimed that residential ("mass market") customers are not served by UNEs. At all.  Denying falsely not just Raw Bandwidth's use of UNEs to do exactly that, but hundreds of other competitive providers spread around the country who do just that.  The petition points to a decline from peak in the total UNE count and an average decline of 6.9% per year they calculated has been ocurring. Even then, there are about 2 million unbundled network elements still in use by competitive providers (to service all types of end users, not just mass market) as shown in their own data (the peak in 2005 was about 4.5 million); hundreds of thousands of customers of competitive providers are served by those lines, and USTelecom wants to raise prices on providers and in turn the retail customers like you, and in some cases cut the providers off from their customers entirely.


    4. AT&T has claimed (in an ex-parte letter also filed in the proceeding) that they and their affiliates don't use UNEs to service mass market (residential) customers which is technically true from a legal standpoint, but only because they are not called UNEs and not sold to itself under TA96 and the FCC's regulations when AT&T uses the 2-wire loop, dark fiber transport, or other network elements itself. AT&T still uses 2-wire loops extensively wherever it still provides service using DSL (including U-verse DSL).   It's a misleading point though because they use a technically identical 2-wire loop element themselves and have to maintain it regardless of whether it is sold to a competitor as a UNE or used internal to their own services.  At Shelter Creek and Peninsula Place for example, AT&T still only has DSL-based service itself and uses 2-wire loops to reach its own customers there; we provide faster service than they can at the properties because we put our own equipment on site.  AT&T over the past two years has gone on a bit of a blitz deploying fiber to the home in many parts of the Bay Area, but has focused on areas that are relatively easy, with overhead wiring; most areas with underground wiring and even many overhead areas are still being upgraded and it'll take years, and even where AT&T has deployed fiber to the home they haven't forced existing customers of their own to switch to it.


    5. USTelecom talks about increasing wholesale pricing of network elements if freed from the regulations via forbearance, but forbearance won't technically require them to continue to offer the elements at all. Assuming they do, they'll undoubtedly do so at prices that would strangle competition and make competitors like us not price competitive because of the necessity to raise prices on our customers.  With respect to the dark fiber transport UNE to connect between AT&T's buildings, AT&T doesn't offer any dark fiber services generally (only to governments and some other large providers who have fiber to offer to them).  We would be stuck purchasing much more expensive services to connect between CO buildings with in most cases no option but more expensive "lit" services from AT&T itself with less control of reliability.  With respect to the 2-wire loop UNE to reach individual customers, ILECs including AT&T are the only suppliers of this network element in the market place with only one ILEC in any given location.  The element is a natural monopoly, and the ILECs are true monopolists over it.  Note antitrust law doesn't help, because the general findings in antitrust law are that if something is subject to a regulator like the FCC, the regulator is responsible for setting the rules, and if they choose not to regulate then antitrust law doesn't then take over because declining to impose rules is a form of regulation.


    6. USTelecom ignores the long standing "natural forbearance" available to ILECs.  For quite some time now, the FCC has had in place "copper retirement" rules which allows ILECs to retire and no longer use at all 2-wire copper plant in areas where they have overbuilt it with fiber and no longer need the copper themselves.  This is a form of natural forbearance, because fiber loops to customer locations don't have to be shared under the FCC's rules, where ILECs can already kick competitors off their copper plant by stopping use of it altogether (with appropriate notices and regulatory approval).   As noted above, one of USTelecom's arguments is that by raising prices on competitors on wholesale network elements, more money would be spent on deploying fiber optic network.  But the increased spending is minuscule compared to current capital expenditures, there is nothing that ensures additional money made by incumbents after hurting competition would be spent on fiber deployment (they can continue using the copper to service their own customers plus whatever they pick up in terms of customers of competitive providers that lost service), and the existing natural forbearance of the copper retirement rules is already a direct incentive that never gets triggered unless they prove it by actually making the investment in fiber or other next generation network deployment first. There has not been much copper retirement in California because AT&T and the other ILECs in the state have not achieved ubiquitous fiber deployment even in narrow geographic areas.


    7. USTelecom's claims that hurting competition with higher rates or cutting off competition will somehow lead to lower rates for consumers.  They sort of hand wave around this claiming that increased fiber deployment lowers costs and consumers would see lower prices.  If fiber deployment lowers costs (it very well may reduce maintenance costs after the initial deployment cost is incurred), then they are self incentivized to deploy the fiber.  To claim that if competitors are kicked off or subjected to higher costs of doing business will somehow lead to lower cost for consumers is laughable and not supported by economic theory. Lower costs for consumers like you flows from the presence of competitors, not from a reduction in competition for the ILECs.  If you only have one or two options for Internet access, there is no competitive pressure forcing them to lower rates and any cost savings they can find will simply go to the ILECs' bottom line.


    There are other problems with USTelecom's petition as well; the above is just a sample to give you an idea of what we're dealing with.  The petition also asks for nationwide forbearance even though the statutory and FCC rules for forbearance applications require a market-by-market analysis (both geographic and functional) which the petition doesn't provide.  In fact, the petition mentions prior FCC decisions in another area called Business Data Services (BDS) which occurred last year and which granted price regulation relief in many markets for those services (using particularly weak metrics as a proxy for competitive options as the basis for granting that relief) as justifying an extension to the relief requested in this petition, but the BDS Order found some markets were not competitive even for BDS and maintained price regulation in those.  Other industry commentators have made the legal arguments in the docket with regard to that issue in opposition to the petition, including motions for summary denial of the petition because of the lack of adequate evidence being included with the petition.


    Where can I read the actual USTelecom petition and the comments that have been filed so far?

    The petition itself, any instructions and orders of the FCC, as well as comments and letters filed by any interested parties or the public, are filed through and then made available to the public in the FCC's Electronic Comment Filing System (ECFS).   The petition is being handled by the FCC's Wireline Competition Bureau and was assigned WC Docket #18-141.


    Here is a direct link to the USTelecom petition itself.


    There are more than a thousand comments from individuals and small businesses filed in the docket so far, especially since mid July, but most of the comments filed by competitive providers and trade associations, state public utility commissions, and other industry participants, which get into more specific and detailed discussion and rebuttal of the petition were filed around August 6th since that was the deadline for opening comment submissions.  Here's a link to the docket filing list limited to documents filed between August 1st and 7th to focus on these more detailed comments so far if you'd like to read them. (Documents listed as Confidential will have an entry that doesn't lead to the document, but a non-confidential version of the same document (with confidential information redacted) should be found farther down in this document list.)


    Click here to pull up all of the filings in ECFS in the docket in reverse date order (newest first).  Note there are more than 1,300 entries in the docket so far, most of which are informal comments from individuals and small business like we're asking you to do.  Most of the industry filings can be found by narrowing to filing types under Top Filing Types selection other than 'Letter' since most of the informal comments are categorized as Letters, but some industry comments may be categorized as Letters.


    Here is a pretty good article summarizing the issues (the article mentions an August 6th vote which is inaccurate; a vote will not occur until late this year or early next).

    https://www.engadget.com/2018/07/11/small-internet-providers-face-a-fight-for-their-lives/






    We ask you to file comments at the FCC in support of competitive Internet access and telephony providers, and to urge denial of the USTelecom petition for forbearance. Here's how to do it....

    Ideally any comments filed would be filed by September 5, 2018.  There is no certainty comments filed after that date will be considered by the FCC.


    A coalition of competitive providers has made a couple of websites that makes it very easy for you to file informal comments on USTelecom's forbearance petition.  We encourage you to do so in order to help save competition.  It's a good idea to explain how you've benefited from having competitors available, whether it's from lower prices, faster speeds, features that you value, better support, etc.  Even if you are not using a competitive provider today, you can mention past benefits you've received.  It's not necessary for you to get into legalistic citations to code sections in your comments, informal comments are fine and expected. If you agree that having competition in the marketplace helps keep prices lower and helps drive innovation, compared to only having one or two choices such as Comcast vs. AT&T, that's helpful too.  Try not to be too general though, you should explain your comments in the context of competition and the benefits it brings.  For example it's not that helpful to merely tell the FCC you want faster speeds, because USTelecom's position is that cutting off the competition will help get you faster speeds, even though we contend that having competition is an important part of what motivates all providers (both incumbents and competitors) to strive for improving speed and that cutting off competition is not going to magically bring it but will actually relieve some pressure on the ILECs to improve themselves.  In general, make it clear you're writing in support of competitive providers and are asking the FCC to deny the petition.


    Here are two websites that allow you to submit comments to the FCC in this docket easily (note they both use the same submission mechanism and form, but present it slightly differently):

    https://savecompetition.com/

    https://www.bridge2broadband.org/ (this one has an autoplay video on the front page)

    Please try to submit comments ASAP, preferably by September 5th, to ensure they are considered.

    Please note that these forms will ask for your name and address to complete the submission after you "send" your comments (be sure to complete both steps), and your name and postal address entered into these forms will become public on the FCC's website once the comment is filed and posted (typically the next business day) publicly in the FCC's electronic comment filing system (ECFS).


    These websites don't get into a lot of detail about what the forbearance petition is all about which is why I decided to put together the web page you're reading now in order to explain it more fully in the context of Raw Bandwidth.  If you jumped to this section, I'd encourage you to read the entirety of this page and expand each section with the plus symbol on the left just to get a better idea of what's being requested and why it would impact Raw Bandwidth and other competitive providers in such a negative way.

    If you are a business or even a private individual and would otherwise want to write a more formal letter on your letterhead, doing that can have a bigger impact than the informal comments coming in through the web links provided above. If you'd like to do that please contact me, Mike Durkin, at mdurkin@rawbw.com and I'll advise what administrative elements you need in the letter and can help you submit it into the docket at the FCC once your letter is ready.


    Initially published 8/28/18.  This page will be updated as the petition is considered (and material updates will be highlighted and noted to help you find them) and once the matter is decided will be updated with a link to the FCC's decision.