FCC EYES EASING REGULATION FOR ILEC BROADBAND SERVICES

FCC “tentatively concluded” at its agenda meeting Thurs. that DSL and other “telephone-based” Internet services should be reclassified as information services, action that could lead to less regulation for Bell company-provided broadband services although it was uncertain exactly what impact would be. Information services such as voice mail and e-mail traditionally operate under fewer regulations than do common carrier services. FCC said action could improve investment climate by eliminating regulatory uncertainty. It said it also could lead to more equitable regulatory treatment across different broadband platforms. Bells have been asking for long time for lessened regulation of their broadband services, saying that would make them more comparable to cable modem services.

FCC’s vote drew angry response from ALTS Gen. Counsel Jonathan Askin. Calling it “the worst order I've every seen,” he said proposed classification could lock out competitive DSL providers from broadband service provision because Bells could use it as excuse to bar access to unbundled broadband network elements (UNEs). There no longer would be need for Tauzin-Dingell because Bells would get their deregulation through agency action, he said.

FCC Chmn. Powell reacted just as strongly to such concerns, saying they were “shortsighted and incorrect,” example of “trying to treat something complicated in a black- and-white manner.” Powell, who talked to reporters after meeting, said ILECs still were regulated under various provisions of law. Obligations of Telecom Act’s Sec. 251 and 252 would remain, as well as InterLATA restrictions, Powell said. He said action wasn’t aimed just at incumbent LECs but was seen as framework for all broadband services, with Commission taking “functional” approach rather than regulating by type of technology. He said he “bristles at the suggestion” that proceeding was “effort to cut off competition.”

Covad Vp Jason Oxman said he didn’t think order had direct impact on market-opening obligations of ILECs such as unbundling, colocation and interconnection. “It’s not about wholesale, it’s about the regulatory classification for retail broadband services,” he said. However, he said, ILECs “will try to use this proceeding to chip away at competition,” so FCC should be careful not to permit incumbents “to force their anticompetitive agenda into a proceeding that aims to answer questions related only to retail services.” Oxman said he interpreted proceeding as being limited to “how retail services should be classified and regulated.”

FCC’s notice of proposed rulemaking (NPRM) asks numerous questions about regulatory impact of reclassifying DSL provision by Bells, including: (1) Whether, as result of reclassification, long-standing Computer Inquiry network access requirements should be modified or eliminated. (2) Whether “important national security, network reliability and consumer protection obligations” should continue to apply. (3) How to strike balance between obligations of state regulators and FCC in overseeing broadband Internet access. (4) Whether facilities-based broadband Internet access providers should be required to contribute to universal service fund. In meeting, FCC staff said facilities-based providers could include cable, wireless or satellite broadband services.

FCC Comrs. Copps and Martin registered partial dissents to different parts of NPRM. Copps objected to idea of removing regulations such as requirement that ILECs provide UNEs to competitors, which he said could occur under new classification. He said he thought Commission was stepping beyond its authority under Telecom Act. “I fear we are outdriving the range of our headlights.” Next thing you know, he said, reclassification could be “excuse” for eliminating privacy rules, slamming and all sorts of consumer protections. Martin objected to universal service provisions of plan, saying he thought FCC shouldn’t view “Internet access as a revenue stream.”

FCC said proceeding would parallel similar one under way for cable modem service, specifically Commission’s tentative classification of Internet access service as “information service with telecom component.” Asked what that meant, Common Carrier Bureau Chief Dorothy Attwood said it took into consideration fact that Internet access service would include transmission component. Agency said information service classification would apply to ILEC Internet access services whether over 3rd party’s facilities or its own affiliates.

Abernathy said those questions had to be asked because industry couldn’t operate on regulations “developed when copper wire provided party line service.” Powell said “greatest challenge” facing telecom industry was “how to stimulate investment” by eliminating regulatory uncertainty and this item could go long way toward that goal. Yes, item has “far-reaching implications,” he said, “but broadband will have far-reaching implications. This is not the time for timidity.”

Bells and other ILEC representatives praised FCC action. USTA applauded agency “for undertaking the challenge rationalizing broadband policy and regulation to conform with the realities of changing markets, convergence, competition and consumer choice between competing platforms.” Qwest said Commission “showed great leadership in starting down a path that could hasten the widespread deployment of broadband- based technologies.” Telecom Industry Assn. also praised agency, saying “all of the industry needs an environment where the regulatory rules… are more clear and potential providers of broadband services are not discouraged from investment.” SBC CEO Edward Whitacre praised FCC for taking action “that encourages investment, promotes competition in the marketplace and accelerates the benefits of high-speed Internet access.” Objective should be to ensure providers of same services are treated equally, he said: “Under the current patchwork system, the growth and availability of broadband services is threatened by the increasing regulatory disparity between providers of competitive broadband services.”

However, Jeffrey Chester of Center for Digital Democracy said that by declaring broadband to be information service, FCC was “giving the gatekeeper control of a handful of cable and Bell supermonopolies.”