<A> FCC drops ball on RBOC regulation Complex government proposal, containing numerous exceptions, finding few fans
By David Rohde
Network World, 08/10/98
Washington, D.C. - A long-anticipated government proposal to give broadband public networks a big boost appeared to fall flat just hours after being proffered.
The Federal Communications Commission last week proposed letting regional Bell operating companies establish largely deregulated subsidiaries to offer data services over digital subscriber lines (DSL) and other advanced technologies.
The idea is to speed up advanced technology deployment by freeing the RBOCs of the requirements to resell their services or lease ports on their switches to competitors. The RBOCs previously complained those requirements discouraged them from investing in high-speed nets.
But the FCC included so many exceptions and qualifications in last week's proposal that almost no one seemed to be happy with it. Most notably, none of the five RBOCs said they would move their DSL deployments into the new regulatory structure or accelerate deployment to reach more users as a result of the FCC proposal.
"It's a hollow victory for the RBOCs," said Michael Elling, a managing director for the telecommunications practice at Prudential Securities in New York. "This doesn't encourage RBOCs to build any more work-at-home applications or anything else."
The RBOCs agreed. "This action falls far short of the giant leap required to deploy advanced telecommunications services to all Americans," said Tom Tauke, senior vice president for government relations at Bell Atlantic.
Forcing a plan
The FCC's proposal stems from petitions filed earlier this year by four of the five RBOCs. The petitions seized on the little-known Section 706 of the Telecommunications Act of 1996. Virtually ignored until this year, Section 706 forced the FCC to come up with a plan within 30 months of the act's enactment to ease regulations blocking the deployment of broadband data services. That deadline passed last week.
Under the FCC's proposal, RBOCs could move key digital-line equipment, such as DSL Access Multiplexers (DSLAM) and other electronics, into an "advanced network subsidiary." This subsidiary would not be regulated like an RBOC, which must open its switches and other network gear to competitors. So the DSLAMs would not have to be offered to competitors, and the subsidiary would not have to offer DSL lines with a wholesale discount to resellers.
But bowing to lobbying from long-distance carriers, the FCC loaded up the proposed subsidiary with restrictions. Most notably, the subsidiary could not provide long-distance service for data transport - a key part of the RBOCs' Section 706 petitions - and would still have strict rules on letting competitors collocate their own DSL equipment (see graphic).
FCC Chairman William Kennard promised to turn the proposal into a final rule by February 1999 - a quick turnaround by FCC standards. "We should have a sense of urgency about this," he said. Pleading with lobbyists not to tweak the proposal to death, Kennard added: "What the American consumer wants is more bandwidth from multiple providers. We really don't care who gets there first."
Numerous carrier officials questioned whether the proposal would achieve any of the objectives.
"We're concerned this proposal will actually delay the process," said an Ameritech spokesman. "We think this is adding more hoops to jump through, rather than removing them." Ed Young, senior vice president and deputy general counsel at Bell Atlantic, said the separate-subsidiary requirement adds administrative costs instead of reducing them.
If the RBOCs didn't seem anxious to use their new proposed power, long-distance carriers wanted to make sure it didn't even get on the books. They claim that letting RBOCs out of resale requirements even with separate subsidiaries is unworkable.
Too complex to help
"The phrase 'separate affiliate' is an oxymoron," said Jonathan Sallet, chief policy counsel in MCI's lobbying office here. "It's like paying yourself to park in your own garage."
Besides, the RBOCs don't need special rules to goose their DSL deployments, because they're already underway, argued lawyers for MCI merger partner WorldCom. Before the proposal was issued, WorldCom lawyers went to the FCC and dumped an 86-page stack of printouts from the Bells' Web pages extolling the RBOC's already announced DSL plans.
Users were likewise concerned that the FCC's proposal was too complex to prove useful. "It's extremely confusing," said Scott Matluck, deputy director of telecommunications at the New York City Board of Education. "I can't fully understand who would gain from this one."
Matluck, who is president of the Communications Managers Association, a regional user group, said the qualification for giving RBOCs deregulated data services shouldn't be extra administrative rules that don't directly benefit users. Instead, the FCC should simply require that for basic services RBOCs meet "agreed-upon service levels for their main lines of business" and then allow them to offer deregulated advanced services.
One group of carriers - emerging competitive local exchange carriers (CLEC) installing their own DSL equipment but relying on the RBOCs for the last mile - professed to see some promise in the FCC's scheme. That's because CLECs selling DSL services require two things: 10-by-10-foot spaces in RBOC switching offices to house their hardware, and access to the copper phone lines that go to customer sites, said Steven Gorosh, vice president and general counsel for NorthPoint Communications in San Francisco. Those two item are guaranteed under the FCC's proposal, if the RBOC sets up the separate subsidiary.
But some observers were concerned about an additional restriction: If the RBOCs set up separate subsidiaries, they will be ordered not to run any voice traffic over them. That addresses concerns voiced by AT&T and MCI executives in recent weeks that Section 706 could be a ruse to shake off regulations on ordinary telephony.
"This wasn't intended as a back-door way into long distance for voice," protested Bell Atlantic's Young. But he conceded that "once something is converted to ones and zeros, how do we know what it is?" Added MCI's Sallet: "That's exactly the kind of problem that argues against the final adoption of the separate affiliate option."
Senior Editor Tim Greene contributed to this story.
from nwfusion.com (free registration req) |
