Legal Definitions - unbundling rules

Unbundling rules are regulations established by the Federal Communications Commission (FCC) within the telecommunications industry. These rules were created to promote competition, as mandated by the Telecommunications Act of 1996. They require dominant telecommunications companies, often referred to as local-exchange carriers, to make specific components of their existing network infrastructure available to competing service providers on a separate, or "unbundled," basis.

This means that instead of having to purchase a complete, integrated service package from an incumbent provider, new or smaller competitors can access individual elements of that provider's network. These elements might include physical infrastructure like copper loops or fiber optic lines, or functional capabilities such as switching and transport services. The primary goal of unbundling rules is to lower barriers to entry for new competitors, foster innovation, and ultimately create a more competitive market for telecommunications services, benefiting consumers.

Here are some examples of how unbundling rules apply:

• Example 1: A New Internet Service Provider (ISP)

  A startup internet service provider wants to offer high-speed broadband services to homes and businesses in a particular city. Instead of undertaking the massive and costly project of laying its own fiber optic cables throughout the entire urban area, unbundling rules allow this new ISP to lease access to the existing fiber infrastructure owned by the dominant, incumbent telecommunications company in that region.

  This illustrates how the new ISP can "unbundle" the physical network infrastructure (the fiber optic lines) from the incumbent's complete service offering, using only the necessary components to deliver its own distinct internet service to customers.

• Example 2: A Smaller Regional Telephone Company

  A smaller, regional telephone company aims to expand its traditional landline phone service into a neighboring town where a large, established local-exchange carrier already has a comprehensive network of copper telephone lines and central office switching equipment. Under unbundling rules, the smaller company can lease access to these existing copper lines and the necessary switching functions from the larger carrier.

  This demonstrates how the smaller company can access specific "elements" of the incumbent's local-exchange network—the physical copper loops connecting homes and businesses, and the switching capabilities that route calls—separately, rather than being forced to build its own infrastructure or purchase a complete, bundled service from the incumbent.