To: djane who wrote (51752 ) 8/6/1998 5:32:00 PM From: djane Respond to of 61433
Local Phone Companies Let Loose on High-speed Internet Development [Nice analysis of FCC decision]idgnet.com August 06, 1998 By Elizabeth Wasserman In an effort to spur the deployment of high-speed Internet links to the average American home, the Federal Communications Commission today lifted a major roadblock preventing the big local telephone companies from jumping into the bandwidth market. The five-member regulatory panel, in a unanimous vote, ruled that the local telephone carriers may set up separate subsidiaries to offer a range of high-speed data services - called xDSL - and that these subsidiaries can skirt regulations that now force the carriers to resell use of their systems to competitors. But even today's historic move may not be enough to stave off a congressional review of the panel's commitment to deregulating the telecommunications environment. Rep. W.J. "Billy" Tauzin, chairman of the House Commerce Committee's telecommunications subcommittee, said in an interview that he plans to charter a special task force in the next six months to begin looking at the FCC. While Tauzin said the panel's move today was in the right direction, he doesn't believe they have done enough to foster competition in the marketplace. The commission's action today came partly in response to congressional mandates. Under the Telecommunications Act of 1996, the FCC was to authorize an examination of the deployment of high-speed data lines nationwide by this Aug. 8 if the panel found that those services were not being offered quickly enough. That's why, in a related measure today, the commission also authorized staff to begin an inquiry into how federal officials can help nudge industry into linking consumers to greater bandwidth services from a variety of technologies, such as wireless, satellite, cable modems, set-top boxes and digital television. Most of the industries that are developing these services are not regulated and therefore future commission action would likely focus on breaking down more regulatory barriers for the so-called Baby Bells. "I think there will be a day in the not-too-distant future when we look at the Internet in 1998 as being in a very primitive stage," FCC Chairman William Kennard said before the vote. "These items are all about hastening that day.The key to hastening that day is creating more bandwidth." [Nice quote] The new policy is likely to result in heavy lobbying from a variety of interests. Long-distance phone companies and new telecommunications companies have complained that local carriers have not opened up local markets to competition, one of the requirements before the local carriers are permitted to break some of the federal regulatory shackles. At the same time, the local carriers don't believe the commission's actions go far enough. They had asked for permission to be able to compete for data services across the local access telecommunications areas set up 15 years ago, during the break up of the AT&T monopoly. The companies also oppose the concept of setting up separate entities to provide the data services, which require that they compete for access to the "last mile" of telephone lines to homes and businesses with their competitors. "We think an affiliate is good for competition," said Jason Oxman, a staff attorney in the FCC's Common Carrier Bureau. That way, he added, the local carrier "waits in the same line for access to the incumbent telephone carrier's office space and copper wires." Current rules require the local phone companies - which still retain virtual monopolies over local service although some competitors are starting to make inroads - to lease the use of their systems to new competitors in the local markets. The Bells have argued that these regulations discourage them from investing to upgrade their existing lines to handle high-speed data communications, because the profit incentive is reduced when they have to offer the services for use at wholesale rates to competitors. Opponents argued that the Bells could use their monopoly position in the local market to try to extend that to data services. "We are concerned," the Association for Local Telecommunications Services said in a press release, "that the proposal allowing Bell monopolies to sell advanced data services through unregulated subsidiaries could delay the spread of competitive alternatives. Recent experience demonstrates the difficulty competitors face in accessing unbundled local loops and collocation from the regulated monopoly. Unless they are equally regulated, monopoly-owned data subsidiaries may prove to be even less cooperative." The FCC's action today was a clear victory for the five remaining Baby Bells and GTE , providing them with a way to circumvent the resale regulations and compete to provide data services in an unregulated environment. It amounts to one of the biggest victories for the local phone companies in the wake of the passage of the Telecommunications Act of 1996. The Bells have repeatedly petitioned to compete in long-distance markets, but have been rebuffed by the commission and the courts for failing to open up their local markets to competition. The commission's action comes as part of a mandate from Congress in the Telecom Act to review the deployment of high-speed services nationwide, particularly to schools, by Aug. 8 of this year. While Internet broadband access is becoming more widely available, commissioners said they saw the entry of local telephone companies into the market as a way to spur more rapid deployment. Meanwhile, Tauzin said the special task force that he will empanel is expected to examine possible restructuring of the agency, whether it needs a new mission given the changing telecommunications landscape, and even whether it needs to be governed by a panel of political appointees as opposed to a single administrator. "We want to be as open in this process as possible," he said. "They certainly have roles to play as prime managers of the nation's spectrum. And they have an enforcement role in the marketplace. But we need to examine how much of a regulatory role should they have in the marketplace and whether there are bureaus that ought to be abolished." The FCC action is a proposed policy that will be subject to review before it becomes law. They haven't disclosed how lengthy the review period will be. Also, the Bells' requests to compete for data services across long-distance boundaries were denied. Copyright c 1998 The Industry Standard | All rights reserved | Webmaster