negotiationWindstream and USTelecom have reached a compromise agreement involving telecom unbundling that would offer an alternative to a filing made by USTelecom back in May. The agreement requires FCC approval, but generally the FCC looks favorably upon agreements that opposing telecom stakeholders have been able to negotiate without FCC involvement.

“Together we reached an agreement that promotes adoption of modern technologies, provides adequate time for customers to migrate to new platforms, and minimizes the customer expense,” wrote  Windstream President and CEO Tony Thomas in a blog post.

Telecom Unbundling Requirements
Incumbent local telecom service providers such as those USTelecom represents for two decades or so have been required to sell portions of their network – typically the “last mile” copper link to the customer location – to their competitors at regulated pricing. In May, USTelecom asked the FCC to cease enforcing this requirement, arguing that telcos would investment more than $1.8 billion additional new dollars and consumers would save $1 billion over the next 10 years as a result.

INCOMPAS, an association representing competitive carriers, argued that relaxing unbundling obligations would hamper, not hasten, broadband deployment and lead to higher prices.

Windstream is both a buyer and seller of unbundled network elements (UNEs). The company sells UNEs in its local service territory and buys them in areas outside that footprint to support services that it sells to its enterprise customers. The company likely had more to lose from USTelecom’s May unbundling proposal than it had to gain, however.

As Thomas explained in his blog post, that proposal included an immediate 15% price increase followed by an 18-month period and “would have been devastating for competitive providers and their customers.”

The new agreement calls for the transition period to be extended until February 4, 2021 with no price increase prior to that time. Although Thomas said the new agreement “is not a perfect deal,” he added that it does benefit “all sides.”

Unbundling requirements helped spur a competitive telecom market by minimizing the investment that competitive carriers had to make to serve a customer. Instead of completely overbuilding the incumbent carrier’s network, competitors were able to build aggregation and transport networks and use the incumbent’s connection for the final access link to the customer. Increasingly competitors have extended their networks all the way to the customer, but some customers have multiple locations and competitors may use a mixture of their own access links and access links purchased as UNEs from the incumbent to serve those customers.

The FCC already has taken some steps to relax unbundling requirements. In 2015, the commission said incumbents would no longer have to unbundle voice-grade 64 kbps circuits when they deploy fiber to a customer even if they remove existing copper – but they would have to continue to serve any wholesale customers that were already receiving the unbundled fiber service.