Consumers and small businesses would suffer if FCC limited use of...

or 3 months on year- old petitions seeking elimination of switching from list of UNEs that Bell companies have to share with competitors. Such action in effect would eliminate UNE-Ps as options because switching is needed as part of platform. Result would be cutback in competition and less choice for consumers because UNE-P companies are more likely to serve residential and small business customers, said Joe Gillan, consultant for group, known as Promoting Active Competition Everywhere (PACE) coalition. He said coalition’s 9 member companies alone served 750,000 customers. MCG Capital CEO Bryan Mitchell said capital markets had turned to UNE-P companies as better risks because they promised faster cash flow than companies that had their own switches and transport facilities. Financial markets aren’t willing to wait as long for results from CLECs as they once did, Mitchell said. “Our enthusiasm [for facilities-based CLECs] has waned in a rather complete fashion,” he said. “People failed to consider the amount of money [needed to build] duplicative networks.” UNE-P entry “energizes capital markets,” he said. PACE members said at briefing that it wasn’t fair for opponents to paint UNE-P companies as riding on ILEC facilities rather than investing in their own equipment. They said all 9 PACE members had invested in facilities, just not necessarily transport facilities. For example, Z-Tel Network Services Pres. Robert Curtis said his company invests in high-tech software because it offers customers Web-based phone services. Peter Karoczkai, senior vp of InfoHighway Communications, said his company used UNE-P as part of broader mix of integrated services to small and midsized businesses. He said company had ATM switches, point-of-presence equipment and other facilities and was colocated in several ILEC central offices. PACE companies have more than $1.8 billion of invested capital in such areas as back office systems, software and advanced data services, group said. Eliminating UNE-P would cut back on deployment of advanced services and frustrate innovation, they said. UNE-P is one of “most misunderstood of telecommunications strategies,” Curtis said. He said there were 2 kinds of investment -- building new infrastructure or taking advantage of ILEC infrastructure and investing in innovative customer applications. PACE members criticized Allegiance Telecom and several other facilities-based CLECs for urging FCC to halt use of UNE-P as transport strategy. “Don’t be confused by their motive,” said PACE attorney Genny Morelli. “It’s a capitalist motive” to keep competitors out of market, she said. “I would ask Allegiance, what are you afraid of.” Petitions seeking restrictions on use of UNE switching were filed by ILECs, primarily, although Allegiance, Time Warner Telecom and XO had lent support to movement, PACE members said.