Update - BOCs, Computer Firms Seek ADSL Deregulation
December 8, 1998
WASHINGTON, D.C., U.S.A.: (Note: Adds
response from MCI-WorldCom)
Representatives from a cross-section of baby
Bell local telephone service providers and
computer companies today said they would
ask the Federal Communications Commission
(FCC) to ease restrictions that prevent local
phone companies from offering high speed
digital subscriber line services for Internet
access.
In a press conference this morning at the
National Press Club in Washington, D.C.,
representatives from BellSouth Corp., Intel
Corp. [NASDAQ:INTC] and Compaq Computer
Corp. [NYSE:CPQ] announced their intention
to ask the FCC to permit local phone
companies to offer advanced digital
subscriber line (ADSL) services on an
inter-LATA (local access transport area)
basis.
Other companies involved in the petition
include Ameritech Corp., Bell Atlantic Corp.,
GTE, US West, SBC Communications,
Gateway2000 Inc. and Microsoft Corp.
[NASDAQ:MSFT].
The FCC has established local access
transport areas, which are larger zones than
area code districts, in which local phone
companies can provide many of their
services. Attempts up until now to offer
inter-LATA services have been rejected by
the FCC because, under the rules of the
Telecommunications Act of 1996, local phone
companies have been ordered to make their
networks accessible to long distance phone
companies. For the most part, this has not
happened, and long distance phone
companies so far have decried today's
submission to the FCC as an attempt to
"make an end-run" around the Telecom Act's
rules.
The local phone companies say that
evidence of the growing amount of electronic
commerce conducted online, along with the
increasing number of Internet users in the
US, proves that more high-speed Internet
access is necessary to sustain the heavy
consumer use of Internet services.
William Reddersen, BellSouth's group
president of value-added services, said the
FCC's current policy of refusal to allow local
phone companies to provide high-speed,
high-bandwidth inter-LATA ADSL services is
"heavy-handed regulation, the type that
discourages investment and deployment of
new services."
Reddersen added that local phone companies
are deploying ADSL services in approximately
80 US markets at this time, saying that they
are making these investments "despite...even
more restrictive regulatory rules." He added
that the local providers, along with high-tech
companies, will not be able to fully invest in
these services if the regulations are not
removed.
That, he said, would translate into slower
and lengthier waits for users trying to
conduct business or buy things online, which
in turn would prevent electronic commerce in
the US from achieving its full monetary
potential.
Compaq Vice President of Advanced
Consumer Products Trey Smith said that the
telecommunications industry is ready to pour
lots of money into high-speed services, but
that "the regulatory environment up until
now has not encouraged that type of
investment."
Ted Jenkins, Intel vice president of corporate
licensing and chairman of Intel's government
affairs, said the FCC's restrictions will "hurt
the economy in general."
The local phone providers have said that
they would be willing to open up their
networks to long distance providers in
exchange for being allowed to provide what
amounts to long distance ADSL access.
One proposal currently before the FCC would
allow the local phone providers to do this if
these high-speed data services were
operated in separate subsidiaries.
Some baby Bells (known formally as Bell
operating companies -- BOCs) have
complained that the costs associated with
forming these subsidiaries would allow them
only to serve wealthy business customers,
rather than most residential customers.
Telecommunications industry analyst Jeffrey
Kagan said that these baby Bells inevitably
will provide these advanced services.
"With every year that ticks by, it becomes
more urgent, or they risk getting left behind
in the dust, which is not in anyone's best
interest except their competitors," Kagan
said. "The trick is to let them build and
deliver these services without taking the
steam away from opening local markets.
That's a tough balancing act for the FCC,
but one which is worth pursuing."
An MCI-WorldCom source told Newsbytes
that, although the local phone companies are
asking for the exceptions only for data
access, it makes no difference whether the
communications are voice or data.
Furthermore, the source added, many
analysts predict that voice communications
will comprise only a small percentage of total
traffic on the network. Therefore the FCC's
acceptance of today's petition would allow
local phone companies to break into long
distance markets without satisfying any of
the Telecommunications Act's requirements
for them to open up their own markets.
MCI-WorldCom Chief Policy Counsel Jonathan
Sallet said in a statement that "In this
holiday season, consumers should beware of
ILECs (incumbent local exchange carriers -
the baby Bells and other established local
phone service providers) bearing 'gifts' - in
this case, a typical monopoly ploy to extend
bottleneck control of voice services to the
Internet."
"In exchange for 'promising' to do some of
what the Telecom Act already requires them
to do, these phone monopolies ask that they
be excused from complying with many of the
law's other pro- competitive requirements,"
Sallet said. "Once excused, they then
'promise' to upgrade their facilities and open
the local loop to competition and
innovation... This proposed cozy inside deal
would do nothing more than allow the BOCs
and GTE to build a digital monopoly by
closing down competitors' access to the local
loop. We urge the FCC to reject this
unlawful, disingenuous and dangerous plan." |
