Following upon its order regarding competition in the local exchange the Federal
Communications Commission (“FCC”), adopted its eagerly awaited regulatory trilogy on
May 7, 1997 through which it purports to further the transition to a competitive
marketplace in the local loop. While each of these orders, Access Charge Reform,
Universal Service Reform and Price Cap Performance Review have specific application
to the post-divestiture system of cost allocations and separations, read together they
attempt a unitary system of rationalizing the flow of costs and a reordering the payment
of charges during the transition from a regulated to a competitive market.
This month NPRG issues its first in a series of monthly analyses to reconstruct the
effect of these three orders on the competitive marketplace generally and upon CLECs in
particular. With this issue we examine the effect of the highlights of the Access Charge
Reform plan on the CLEC industry.
In it we find the following:
Access Charge Reform is better for the CLECs than expected.
The equity markets have responded favorably to the FCC’s orders.
By diversifying their product mix away from heavy dependence upon
access services relative to local service and data products, the CLECs have
helped to insulate themselves from potential adverse reactions from
precipitous regulatory action regarding access reform.
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