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Local Competition
The First Report and Order takes action to remove statutory, regulatory, and operational barriers to local telephone services competition by establishing a framework of minimum, national rules that will enable the states and the Commission to begin implementing the local competition provisions of the Telecommunications Act of 1996. The Order addresses three paths of entry into the local telephone market: full facilities-based entry, purchasing of unbundled network elements from the incumbent local exchange carrier (LEC) and resale of the incumbent's retail services. The Commission prescribes certain minimum points of interconnection necessary to permit competing carriers to choose the most efficient points at which to interconnect with the incumbent LEC's network. In addition, the Commission sets forth a methodology for states to use in establishing rates for interconnection and the purchase of unbundled elements. Actual prices will be set by the states. The Commission concludes that a cost-based pricing methodology based on forward-looking economic costs is most consistent with the goals of the 1996 Act. For those states that do not elect to apply this methodology in time for their arbitration process, the Commission also establishes default proxies that a state commission may use to resolve arbitrations that must be completed prior to a required study. The Commission's decision is the first part of a trilogy of actions that will bring competition to the telecommunications market. The second and third parts are universal service and access charge reform.
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