OECD raps US telecoms regulators

US telecoms regulators need to do more to ensure uniformity in the pricing of unbundled services and increase penalties on...

US telecoms regulators need to do more to ensure uniformity in the pricing of unbundled services and increase penalties on providers that refuse to offer such services to competitive local exchange carriers (CLECs) and others.

That is the view of think-tank the Organisation for Economic Co-operation and Development (OECD).

Regulations require dominant carriers to open, or unbundle, their networks to competitors, to increase competition and choice for companies and consumers.

At present, however, the operator itself determines the price levied by the dominant carrier on the competitor. Such an arrangement gives dominant carriers the ability to pad their charges to such a level that rivals find it uneconomical to enter a given market, said the OECD in its annual Economic Survey of the US.

"There is considerable diversity in pricing of unbundled elements across [US] states that needs to be ended, while finding a different lever on the local companies to ensure they do sell unbundled elements other than preventing them from entering other markets such as data transmission," said the survey.

"In particular, once arguments about the appropriateness of unbundled prices have been settled, the penalties for refusal to sell unbundled elements should be raised very substantially, perhaps bringing them more into line with those imposed for anti-competitive actions in other parts of the economy."

While calling for clearer rules on pricing and higher penalties, the OECD noted a marked increase in competition in local US telecoms services in 2000. The survey said CLEC-provided lines grew to 8.5% of all lines at the end of 2000, which represents the fastest rate of penetration experienced in any OECD country.

The activity of CLECs in heavily populated areas was high, according to the survey. CLECs in New York enjoyed a 20% market share thanks to increased competition in many areas. At the end of 2000, 88% of state residents lived in areas served by at least one CLEC, and more than half of all households lived in areas where there were four or more.

Outside heavily populated areas the situation was not as bright. Almost half of all areas in the US had no competition in the local market. The situation is unlikely to improve unless states shake up their regulatory regimes, the survey said.

The OECD applauded new regulations that require dominant carriers to allow competitors to place their switching and routing equipment in the same building as the local operator.

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