II. Unbundling and Interconnection

Federal and State law places obligations on certain telecommunications providers to interconnect and unbundle their networks for the purpose of ssuring competition. Cable providers and small telecom providers are exempt from this requirement under both State and Federal law. Sec. 322(2) of the Michigan Telecommunications Act requires the Public Service Commission to report on the issue of non-discriminatory access to broadband Internet access transport services. This issue is strongly related to the obli\gations to interconnect and unbundle. This chapter addresses those legal and technical issues.

	Unbundled Telephone Market Diagrams
	Unbundled Cable Market Diagrams - (not available)

The Definition of Unbundling:
   

        Unlike any other means of local market entry, the use of leased portions of the large incumbant telecom networks — called unbundled network elements or UNEs — allows competitive local carriers to rapidly and widely offer an efficient, uniquely differentiated and competitively priced alternative to the incumbant's services. Purchased at wholesale from these networks, UNEs — which include the loop (including conditioned high-speed loops and subloops used for DSL), switch port, switching, transport, signaling systems and databases (such as operations support systems and directory assistance) — can be used either "a la carte" or in combinations to provide competitive services. Access to these elements in combination, commonly referred to as UNE-Platform or UNE-P, at reasonable cost-based rates, is essential for mass-market services to residential, small business customers, etc...

         The federal Telecommunications Act of 1996 identified three ways for a local carrier to enter a market: resell existing total services; build and use its own facilities; or lease UNEs.

         Local service resale is economically unattractive because wholesale discounts are too low - new entrants actually lose money by providing service. Resale prevents competitors from tailoring service to their customers' needs, while allowing the monopolies to continue collecting local network access charges for long distance and local toll calls that originate and/or terminate with the reseller — causing deeper revenue erosion.

         The option of a competitor building its own network is a long-term, high-investment approach that, if taken alone, would result in an agonizingly slow and geographically limited deployment of competitive service.

         Thus, use of UNEs — individually or in combinations — is the best means available to local competitors to quickly provide unique services adaptable to customers' needs at a competitive price on a broad scale. Although local competitors have invested billions of dollars building there own local facilities in more than 100 metropolitan markets nationwide, access to UNEs is essential to offer all customers an alternative choice in every market and every market segment as quickly as possible.

Why UNEs are a Necessity

	UNEs deliver the customer benefits of competition now. Competitors must be allowed to purchase requisite combinations of network elements from the regional companies' networks to offer more customers access to more choices, innovative new products, improved customer service and competitive prices.
	Access to UNEs allows new entrants to swiftly offer residential and small business customers an alternative to the local monopolies in areas beyond the reach of our own local network and switches.
	Unlike resale, UNEs give a competing carrier the ability to truly compete by allowing the competitor to develop and deliver unique pricing plans and differentiated feature packages to customers now - as well as new products, additional features and capabilities in the future.
	Allowing competitors to use UNEs - in tandem with new emerging technologies - will ensure that innovative leading-edge services will be available to all customers, not just those in urban areas.
	Using UNEs allows competitors to provide network access services for themselves and their customers to originate and terminate long distance and local toll calls, which enables local markets to deliver additional value to their customers.
	Using UNEs today provides a smoother migration away from the monopoly network elements in the future, when the competitor's own network facilities become available.
	UNE-based local markets are wholesale customers of the regional companies' network monopolies. Local markets are willing to pay a reasonable price for the UNE-combinations required to provide alternative local phone service. New entrants are paying customers and should be served and treated as such by the regional companies.

UNEs are percieved by many as one of the crucial keys to unlocking the regional monopolies and thus to speeding delivery of the benefits of local competition to all customers.

Access to UNEs = Widespread Competition