Washington Post says FCC to allow RBOCs to offer DSL w/o leasing bundled network elements to competitors.
washingtonpost.com
FCC Aims to Hasten Faster Internet Lines
By Mike Mills
Washington Post Staff Writer
Wednesday, August 5, 1998; Page D11
In a ruling designed to speed delivery of advanced Internet service to
American homes, federal telephone regulators plan to propose tomorrow to
abolish a requirement that the Bell telephone companies lease to
competitors any data-delivery services they may offer to their customers.
The proposed rules, if formally enacted, would mark the most significant
regulatory freedom the Federal Communications Commission has given the
Bell companies to date, despite their monopolistic control over most of the
$110 billion local telephone market. Officials hope the rules will become
final by year's end.
The rules do not go as far as the Bells wanted, agency officials said. They
won't, for example, give the Bells the freedom to carry Internet data
transmissions across local calling boundaries. But they will grant the Bells'
wishes to offer a service known as "digital subscriber line" (DSL) on an
unregulated basis, free of requirements that elements of the technology be
made available to all competitors at discounted prices. DSL services can
carry full-motion video and can transfer complex graphics in an instant, in
contrast to the tiresome delays common in conventional "dial-up" access to
the Internet.
Because the Bell companies' lines are typically the only mode through
which such a service can be delivered, the FCC has required the Bell
companies to allow competitors to avail themselves of any new technology
the companies install.
FCC Chairman William E. Kennard yesterday called the current rules a
"disincentive" that keeps the Bells from making greater investments in DSL
and other high-speed data links. "There is pent-up demand for high-speed
Internet access," Kennard said. "If we can unleash the potential of this
technology, it will release a whole bonanza of opportunities."
Critics of the FCC's proposal, including the "Big Three" long-distance
companies, AT&T Corp., MCI Communications Corp. and Sprint Corp.,
say the move will harm the propagation of faster Internet links by allowing
the Bells to monopolize the field. The Bells, they said, should not get
regulatory relief until they meet requirements under the Telecommunications
Act of 1996 to open their local telephone networks to competition.
Sprint, for example, plans to offer local DSL service to homes and
businesses using its own data equipment at customer premises and a
neighborhood telephone switch. But it needs the Bells for connections to the
local copper phone "loop" that runs from the switch to each house and
building.
"We're still at the mercy of the Bell companies," said John Hoffman, a
Sprint senior vice president. "They can control our level of service, our
continuity of service and whether we have service at all."
Under the proposed rules, which the FCC is enacting by the authority of the
Telecommunications Act of 1996, the Bell companies still would have to
lease elements of their networks to competitors. But they would not be
required to lease the service itself.
Instead, the Bells could offer the new data services through separate
unregulated subsidiaries. Similar to other competitors, the subsidiary would
lease elements of the network from its parent Bell company.
FCC officials contend that competitors of the Bells will be helped by the
move. A Bell's separate data affiliate, they argue, would be thrown into the
marketplace - unaided by its parent Bell company - and forced to connect
to its parent company's network the way all rivals must do. The affiliate, for
example, would have to bargain for the right price to connect its data
equipment to phone lines and haggle for space in each central office switch
to place its equipment.
But the history of phone company subsidiaries argues the opposite, critics
say. The cellular industry is an example, according to an FCC filing by local
carrier Nextlink Corp. The Bells, which received one of two cellular
licenses in each of their markets, routinely favored their own separate
cellular affiliates by denying rivals a connection to phone networks or
charging exorbitant rates for those connections, the filing said.
c Copyright 1998 The Washington Post Company
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