Policy Forum: FCC Moves Could Add to Competitive Shakeout

Of course, the shakeup centers around two key initiatives Powell recently pushed through at the FCC -- the Notice of Proposed Rule-making on wireline broadband Internet access announced in February and related declaratory rulings.

The NPRM on wireline broadband Internet access signals a move away from giving competitors access to unbundled network elements, which are used to provide DSL services. The rule making proposes that the transmission piece of the DSL "information service" be considered telecommunications used in support of information services as opposed to a telecommunications service. The NPRM raises questions as to how to apply the open access and separate subsidiary provisions of its Computer I, II and III rules governing information services delivered by common carriers. As for cable, by a declaratory ruling the commission did what it was proposing to do via NPRM in the case of DSL, which was to classify high-speed data service as an information service under Title I of the Telecom Act.

The FCC's actions drew heavy fire from Senate Commerce Committee chairman Ernest Hollings (D-S.C.), whose committee conducted a hearing in mid March on the recently passed House broadband bill sponsored by Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.). In an opening statement, Hollings lambasted the House bill, taking Powell to task for apparently trying to do what Hollings was determined to prevent in his opposition to the Tauzin-Dingell bill (H.R. 1542). "[I]t appears Chairman Powell may be willing to end run a victory for the Bells rather than regulate the local monopoly as Congress intended," Hollings said. In an earlier hearing on broadband at which Powell testified, Hollings was even blunter, telling the chairman, "You don't care about the law."

Powell took exception to such characterizations, declaring during a March 4 keynote address before the Competitive Telecommunications Association's (CompTel) annual convention, that he found it amazing "that I continue to have to take podiums all across the country and say, yet again, the Federal Communications Commission has never wavered in its commitment to competition. Not once." As for the broadband NPRM, Powell said, "Contrary to the hyperbole, our policy is not one of preferred regulated monopoly or duopoly. One cannot fairly read our broadband order in that regard."

But that's precisely how the actions moving DSL and cable modem services toward a common regulatory platform were interpreted by many observers. "I guess theoretically (the outcome of the NPRM) is up for grabs, and hell could freeze over as well," said Charles Hunter, general counsel for the Association of Communications Enterprises (ASCENT). "But it's abundantly clear the FCC is trying to insulate any advanced services from any kind of pro-competitive regulatory controls. They want cable and telcos to go head to head, and to hell with competition."

While Powell assured his CompTel audience that "if you're a competitive information service provider you will have access to key telecom inputs under the commission's computer inquiry decisions," he also acknowledged the commission will "consider what the appropriate framework is, given the changes in technology and the state of competition." For example, the NPRM asks whether ISPs should be granted access to DSL transmission on a free market basis through price negotiations with carriers, since such transmission would no longer be a tariffed telecommunications service, or whether, because there are other competitive facilities-based means of delivering Internet services in the marketplace, carriers should be altogether free from any open-access requirements.

As for cable, the commission's declaratory ruling got cable operators off the hook with respect to the issue of whether cable modem service should be classified as a telecommunications service, which means the common carriage access provisions of the Telecom Act will not apply.

As he did with the DSL NPRM, FCC commissioner Michael Copps issued a dissenting statement against the cable ruling in which he chastised the commission for moving beyond what he believes is the intent of the Telecom Act. He said freeing cable modem service from the regulations, under Title VI, that govern cable video service or from the Title II rules that affect cable voice services opens the door to cable operators' offering voice and video in IP format without being subjected to any of the normal regulatory bonds.

However, Powell made it clear that the commission has yet to make a determination about how it would regulate delivery of voice services over high-speed data links.

The commission's latest actions were welcomed on both sides of the incumbent cable/telco divide. At BellSouth Corp., Bob Blau, vice president for executive and federal regulatory affairs, issued a statement saying, "BellSouth is encouraged and certainly commends the commission's effort to rethink the type of regulatory framework that should apply to cable modem and DSL services and, more importantly, whether these services need to be regulated at all. They don't."

Robert Sachs, president of the National Cable Television Association, said the commission's action established "a needed policy framework" for cable data services. "The classification of cable modem service as an information service and not as a telecommunications service sends a strong signal that cable Internet services will be able to continue to develop in a business environment that favors competition over regulation and encourages new investment," Sachs said.

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