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Divided FCC Makes Outcome Uncertain in Phone Deregulation
Friday January 10, 4:38 pm ET
By Mark Wigfield
biz.yahoo.com
WASHINGTON -- Rarely has counting to three been more difficult at the Federal Communications Commission.
The five-member FCC is in the final weeks of a complicated, controversial, closely watched rewrite of telephone competition rules. That vote will be followed in the next few months on equally tough decisions on deregulating broadband services.
Garnering the necessary three-vote majority to pass any of these measures could prove difficult, if recent votes and speeches by the commissioners are any example.
That's despite the fact that Republicans have a majority on the independent commission, run by Chairman Michael Powell. While the chairman's broad views are known on some key issues, he "doesn't automatically have three votes," says Blair Levin, telecommunications analyst at Legg Mason Wood Walker Inc.
The guts of one proceeding concern a requirement that the Baby Bell telephone companies lease elements of their networks at deep discounts to new competitors. Low wholesale prices set by the states have resulted in unprecedented entry into the Bell-controlled local markets by traditional long-distance companies AT&T Corp. and WorldCom Inc. .
But even before he was chairman, Mr. Powell in 1999 opposed requiring the Bells in major metropolitan areas to discount leases to central office " switches," which connect lines from one home to another. Leasing switches is favored by AT&T and WorldCom, in part because it enables them to electronically transfer customers from the Bells rather than requiring technicians to physically reconnect wires.
Mr. Powell said the commission failed to show that competitors needed to lease Bell switches in the largest markets rather than provide their own or purchase the service from other providers. It's a position the U.S. Court of Appeals endorsed in a key decision last March, which ordered the FCC to rewrite its rules by Feb. 20.
But while removal of switching from the list of network elements in many markets seems a foregone conclusion, the FCC still must grapple with many questions.
What markets need switching and what markets don't? Should the FCC or state regulators make that determination? Should there be a transition period after the decision is made, and how long should it be.
Republican Commissioner Kevin Martin, for example, insisted in a December speech on a strong role for state public utility commissions in the matter. Many states have welcomed competition provide by AT&T and WorldCom, which lease switches from the Bells.
Mr. Martin is likely to be joined by the two Democrats on the panel, Michael Copps and Jonathan Adelstein, forcing Mr. Powell to give states more control than he may have liked -- and likely slowing any phase-out of cut-rate leases for switching.
Tempering any vote will be the threat of further lawsuits.
"The law requires the FCC to establish the parameters," says James Smith, a top lobbyist with SBC Communications Inc. (NYSE:SBC - News) . "The states would gather the data."
A vote on New Year's Eve showed the strength a chairman can gain from deadlines -- and how deadlines still may not bring consensus. The commission is trying to complete its network element proceeding by the Feb. 20 deadline set by the court, although it's still unclear what the consequences are of missing it.
On New Year's Eve, Messrs. Copps and Adelstein reluctantly supported a measure eliminating a requirement for SBC to file with regulators the wholesale prices it charges competitors for leasing its high-speed Internet facilities. The two Democrats said they wouldn't have voted for the order but for this: A failure by the commission to act would have deregulated the service entirely, by default.
"We are left only with the option to concur in the order," the two commissioners wrote.
But that deadline pressure didn't move Mr. Martin, who, unlike Messrs. Copps and Adelstein, indicated the FCC acted timidly by not deregulating the service entirely. He voted against the measure outright.
Mr. Powell's compromise "puts off for another day" the decision whether the service should have been deregulated, Mr. Martin said.
-By Mark Wigfield, Dow Jones Newswires; 202-828-3397; Mark.Wigfield@ dowjones.com |
