The FCC today freed the Bell companies from obligations to make their DSL networks available to independent Internet service providers.
In a widely anticipated move, the commission reclassified wireline broadband providers as information services. Under previous rules, DSL was considered a telecommunications service, which meant providers had to open their high-speed networks to other ISPs on nondiscriminatory terms, and follow other common carrier rules.
The commission had postponed its scheduled monthly meeting from Aug. 4 to Aug. 5, sparking speculation that the four members were politicking behind the scenes to negotiate an order that is a boon for the regional Bell operating companies (RBOCs) such as Verizon Communications Inc., but might not bode so well for competitive local exchange carriers (CLECs).
Commissioners today built on, and cited, the Supreme Courts Brand X decision five weeks ago that let the cable TV industry deregulate its high-speed networks. Republican Commissioner Kathleen Abernathy and FCC Chairman Kevin Martin praised todays reclassification, while Democrats Michael Copps and Jonathan Adelstein lent their support despite reservations.
DSL will be reclassified whether I agree or whether I dont agree, Copps said, calling the order far from ideal. He said the item garnered his endorsement only after it assured protection of Homeland Security measures, continued RBOCs contributions to the Universal Service Fund (USF), ensured competition and prohibited discrimination against smaller providers, and supported disabled Americans access to high-speed Internet services.
Adelstein pointed to those same elements as clinching his final, although reluctant, support of the order. This reclassification was inevitable in light of the Brand X decision, he said.
Todays move establishes a one-year transition period, allowing ISPs to broker deals for access to the RBOCs networks, much like negotiations that have taken place among CLECs and wholesale providers in the wake of the loss of the unbundled-network element-platform (UNE-P) rules. The commission said after this period, consumers will have more DSL providers from which to choose, lower prices and access to higher speeds. If results dont improve, I hope well reconsider, Adelstein said.
If [todays decision] doesnt achieve real results, I hope well admit it and take action, Copps echoed.
Both Copps and Adelstein warned against the RBOCs using todays decision as justification to block competitors VoIP traffic, or consumer access to certain sites and services. Abernathy clarified the order does not mean [the RBOCs] are immune from all regulatory requirements. She said she, too, supports anti-slamming measures, the assurance of privacy and access for disabled Americans. She called the new framework a decision that will spur investment and better pricing plans, and lead to greater choice and better-educated consumers.
Martin concluded the FCCs meeting by extolling the decision to reclassify wireline DSL from telecommunications to information services, noting consumers will benefit.
Other Changes in Store
The changes resulting from todays order for wireline broadband service providers update Communications Assistance for Law Enforcement Act (CALEA) rules and possibly install new regulations on USF contributions. For now, RBOCs must continue paying into the fund for another 270 days. Meanwhile, providers will have to open their DSL networks to law enforcement wire taps to comply with CALEA rules already in place for other telecommunications services.
The Bell companies are hailing todays FCC decision as a means of matching regulations with 21st-century technologies.
This is an important step toward a national broadband policy that allows consumers to enjoy the full benefits of competition, said Susanne Guyer, Verizons senior vice president for federal regulatory affairs, in a prepared statement. At last, regulations are catching up to where consumers and technology have been for some time. This decision will help accelerate deployment of broadband networks, enabling greater choice and increased access for consumers.
SBC Communications Inc.s James Smith, senior vice president-FCC, expressed similar sentiments, calling the ruling a significant accomplishment. The benefits of this ruling will ripple across our communities by encouraging greater investment in and a wider rollout of broadband networks, Smith said. Discarding decades-old requirements and regulatory assumptions that are out of sync with todays competitive broadband marketplace will also spur more innovative products and services for consumers.
BellSouths Herschel Abbott says the changes mean the nations third-largest carrier can put higher-speed products and services into the hands of American consumers. “The transition periods that have been agreed to are workable, adds the vice president of governmental affairs. We look forward to reviewing the words of the final order and implementing the order quickly, so that consumers will be served by exciting new offerings in the very near future, including new and more efficient services to our wholesale customers.”
Meanwhile, the RBOCs victory was supported by industry groups including USTelecom, the Telecommunications Industry Association (TIA), and the National Cable & Telecommunications Association (NCTA). USTelecoms Walter McCormick, Jr., president and CEO, said the vote ushers in more choices for consumers. We applaud the Commission for taking a flexible approach to establish workable rules for all providers, he said in a statement.
Similarly, the TIAs president, Matthew Flanigan, said the organization has long supported the principle that all providers in the very competitive broadband services market should operate in the same minimally regulated environment.
In that same vein, Kyle McSlarrow, NCTAs president and CEO, noted the group supports deregulatory policies that treat like services alike. He added, We invite the telephone companies to take a similar approach to regulation of video services and drop their self-serving demands for special treatment by the government when entering the video marketplace.
The CLEC community was uncharacteristically quiet on the issue. “According to the FCC, today’s action has no impact on CompTel’s carrier members, explained Earl Comstock, president and CEO of CompTel, in a news release. CompTel appreciates in particular that the final order will include measures to ensure continued competitive access to facilities and provides a transition period for ISP access and USF funding. CompTel remains concerned that the regulatory classification decisions in this order will ultimately frustrate the [c]ommission’s stated goals and result in less innovation, higher prices, and fewer jobs for Americans.”
Companies that buy DSL from the Bells companies including Covad Communications Group Inc. and New Edge Networks said they are unable to give their full opinions on todays notice of proposed rulemaking until they get access to the complete text of the order.
Nonetheless, Covad maintained it will continue providing DSL services to carriers because it offers a national alternative broadband network to ISPs and VoIP providers, says James Kirkland, Covads senior vice president and general counsel. [B]ased on statements made at the meeting the order does not impact Covad’s ability to provide broadband and VoIP services. Covad strongly believes that having open networks promotes broadband growth in the U.S., and that requiring broadband service access for independent ISPs has led to lower prices, more innovation and greater consumer choice.