NY Times article. F.C.C. May Act to Aid Home Internet Access
[RBOC spending on ASND products would increase...]
By SETH SCHIESEL, July 17, 1998
Moving to accelerate the delivery of high-speed Internet access to
American consumers, the staff of the Federal Communications
Commission is close to recommending that the big local telephone
companies be allowed to build data systems without having to resell
their use to competitors, officials said Thursday.
The recommendation could come as soon as Friday, the officials said.
If adopted, the plan would represent the F.C.C.'s biggest move in
favor of the Bell local telephone companies since the
telecommunications laws were overhauled in 1996. For the first time
since the act was enacted, the Bells would be allowed to expand their
networks without having to resell their systems to other
telecommunications carriers.
William Kennard, the F.C.C. chairman, supports the plan, which is
sure to draw waves of protest from the nation's big long-distance
carriers and from new local phone companies. The full commission
could issue a proposal next month, but the battle over the plan is likely
to spill into next year before final rules are adopted.
The act says that incumbent local phone carriers, including the Bell
companies and GTE Corp., must resell parts of their networks to
competitors.
The Bells have said that the resale provision could keep them from
investing to upgrade their networks for high-speed data services
because they would have to resell the new technology at wholesale
prices.
Under the plan, the Bells would be allowed to set up data services
subsidiaries that could then build the high-speed systems. The
subsidiaries would not have to resell their operations to competitors.
By supporting the plan, Kennard is taking his first big step away from
his predecessor, Reed Hundt, who was seen as an implacable foe of
the Bells. Kennard has come under crushing pressure from Capitol Hill
as the telecommunications act has failed to produce the wide-ranging
benefits that some experts said would result from its passage.
By supporting looser regulations on local incumbents, Kennard is
making his major move to deliver high-speed Internet access to
consumers.
"Our goal is to turn what is today a trickle into a gushing pipeline of
entertainment and information into the home," Kennard said in an
interview Thursday. Referring to the copper telephone wires that reach
into almost every home in the nation, Kennard added: "The
incumbents, they have the copper infrastructure. It would be a shame
not to create incentives for them to use it for broadband services."
The consumer market for high-speed data services could be the great
telecommunications battlefield over the next few years. Last month,
AT&T Corp. announced a $31.8 billion agreement to acquire
Tele-Communications Inc., the No. 2 cable television company, in
preparation for that fight.
But so far, high-speed access to the Internet has become a widespread
reality only for people who log on at the office. Most Americans who
link to cyberspace from home do so at relatively slow speeds.
"This is the first major initiative of chairman Kennard's chairmanship
that could have a lasting impact on the nation at large," said Scott
Cleland, a communications policy analyst in Washington for Legg
Mason Precursor Group. "The current policy isn't getting it done in
terms of the American consumer getting more bandwidth."
Under the plan, the subsidiaries would have to deal with the parent
company on the same terms as would completely independent
competitors. In addition, the parent companies would still have to resell
basic parts of the phone network, such as the actual wires that go into
homes.
Kennard said that such a structure would allow independent carriers to
compete fairly in offering high-speed services.
"If they do it through a separate subsidiary they should not use their
market power to depress competition from new competitors," he said,
referring to the incumbents.
Thursday night, the long-distance companies continued to criticize the
concept of the Bells not having to resell parts of their networks.
"They want to set up a monopoly system that locks in customers to one
particular technology and locks in monopoly profits," Jonathan Sallet,
chief policy counsel for MCI Communications Corp., said of the Bells.
Initially, the Bells will probably maintain that they should be allowed to
build the data systems within their parent companies without having to
resell them, instead of using a subsidiary. But if the subsidiary proposal
survives, it will still be a big victory for the Bells.
"We want to be able to provide high-speed data services to our
customers and we want to be able to do it in a way that's fair to the
company," said Selim Bingol, an SBC spokesman. "We want to be
able to do it without the regulatory disincentives that currently exist."
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