FCC ruling aids high-speed providers
Could bring cheap, faster connections to consumers
By Jeffry Bartash, CBS MarketWatch
Last Update: 11:48 AM ET Nov 18, 1999 NewsWatch
WASHINGTON (CBS.MW) -- Regulators ruled Thursday that big providers of local-phone service must share their conventional, copper lines with rivals who offer high-speed Internet access, a move that could soon bring cheaper, faster Web connections to millions of Americans.
The Federal Communications Commission ruled the local Bells and GTE Corp. have to allow independent high-speed access providers, such as Covad Communications, Rhythms NetConnections and Northpoint Communications, to sell their service via the same phone lines over which consumers now receive phone calls. The Bells were given 180 days to comply.
At present, customers who want to buy high-speed service from independent suppliers have to order a second phone line at a cost of about $20. The big local phone carriers, however, can provide phone and high-speed access over the same line, giving them a cost advantage that has basically shut the independent carriers out of the consumer market. See Telecom Report.
Shares of Covad (COVD: news, msgs) jumped 1 1/2 to 66 7/8. Rhythms (RTHM: news, msgs) shot up 3 7/16 to 42 3/4. And Northpoint (NPNT: news, msgs) climbed 2 1/4 to 37 1/4. Other firms that offer high-speed access over phone lines -- a service known as digital subscriber line -- also rose on the news.
By allowing independent providers to share the Bells' lines, the independents will be able to better compete on price, the result of which is likely to force fees even lower and make such service affordable for consumers.
The Bells generally charge around $40 to $50 for high-speed access, while independent providers charge $60 to $70, though service is not widely available outside the big metropolitan areas. And even in big cities, availability is spotty.
The ruling should "get high-speed access into homes quickly, cheaply and as fast as possible," FCC Chairman William Kennard said during the hearing Thursday.
The fight is not over, however. The Bells are demanding that they be able to charge the independent high-speed providers a lease rate of 50 percent the total cost of providing a phone line, whereas their smaller rivals want to pay a rate closer to 10 percent of the overall cost. The dispute over price is largely expected to be determined by the states, industry observers say.
In addition, some opponents of line sharing argue that the ruling will give big phone carriers little financial incentive to roll out high-speed access to consumers in less populated areas, where it's more expensive to set up such service.
"Our decision today is not a panacea," FCC Commissioner Susan Ness acknowledged. |
