ISPs QUESTION FCC LINE SHARING DECISION

Four of 5 FCC commissioners raised concerns with portion of rulemaking that eliminated line sharing (although only 2 formally dissented), according to review of their statements. However, it was unclear whether those objections would assist companies such as Covad that might file suit challenging decision (CD Feb 21 p1). Only Comr. Martin, who reportedly brokered agreement, expressed support for eliminating line sharing.

Chmn. Powell, in rare dissent by chairman, said “40% of DSL providers use line-shared inputs.” He called line sharing one of few policies of Telecom Act that had worked: “It has unquestionably given birth to important competitive broadband suppliers… The decision to kill off this element and replace it with a transition of higher and higher wholesale prices will lead quite quickly to higher retail prices for broadband consumers.” Earthlink Vp-Law & Public Policy Dave Baker said: “There were 4 commissioners that supported line sharing” but it still was eliminated: “I've never seen anything like this.”

DSL providers who lease high-frequency portion of ILEC copper will have 3 years to seek other ways to provide their service. Covad will appeal rulemaking shortly after FCC formally releases it, Covad spokesman said Fri.: “Based on what we know, we don’t believe the FCC acted on what was before them.” American ISP Assn. Pres. Sue Ashdown, Covad supporter, wasn’t surprised by company’s legal plans: “They're not shy in that area.” But line-sharing portion of last week’s vote was in response to court decision vacating FCC’s previous rules. Deadline for action was Feb. 20, day FCC chose to phase out line sharing. That could complicate any suit, Baker said: “There are no old rules to go back to.” Issue is important to Earthlink because Covad is major provider of DSL access for it.

Powell wasn’t only FCC member to express concern with abrogation of line sharing. Comr. Abernathy said granting competitors access to high-frequency portion of a copper loop “in my view does not create any real disincentive to invest, because the loops in question already exist and the electronics used to provide line sharing already have been exempted from unbundling.” Comr. Copps said he agreed to eliminate line sharing “in order to reach compromise,” but “I would have preferred to maintain this access.” He said line sharing had created competitive broadband landscape, and rather than “recognizing this contribution and encouraging it, we provide today only an extended transition period to allow competitors to purchase the entire loop facility as a network element, or to pair it with a voice provider.” Ashdown said some competitive DSL providers did purchase loops and Covad could take that approach, or could “refocus its business” toward line-splitting with voice carriers. But she said it was “hard to conceive of a role for an independent ISP in that scenario.”

Comr. Adelstein said he was concerned with line-sharing provision because it was “difficult to agree to such a major limitation on competitors’ access to facilities that are needed to make broadband available to most American homes.” He said several compromises “agreed upon late last night may well undermine the ability of competitors to drive deployment in the future.” Only Martin defended line-sharing decision, saying FCC action still ensured “continued access to existing copper.”

Elimination of line sharing fits Martin’s public record of being backer of broadband at speeds far greater than those provided by entry-level DSL services over copper. Telecom Industry Assn. (TIA), member of High Tech Broadband Coalition, has pushed for multimegabit broadband speeds for consumers. Martin said “we endorse and adopt in total the High Tech Broadband Coalition’s proposals for the deregulation of fiber to the home and any fiber used with new technology.” Ashdown said she supported fiber to home but felt FCC was picking both technology (fiber) and sector (ILECs) at expense of existing competition in DSL over copper.

One surprise to independent ISP community was to find its arguments about DSL competition voiced by Powell, whom they have viewed with suspicion at least since last year when he shepherded rulemaking moving cable modem services to Title I, thus applying it to fewer regulations. “How bizarre to agree with a chairman who has not supported ISPs,” BroadNet Coalition Exec. Dir. Maura Colleton said: “We're all trying to stop our heads from spinning.” Baker hoped Powell’s vocal support for competition in DSL would help in upcoming rulemaking that could see DSL service possibly being defined as “information service” under Title I, just as cable modem service now is. Powell is very deregulatory, Baker said, but “he realizes you can only deregulate where there is competition,” and hoped new landscape created by last week’s action would make Powell less inclined to completely deregulate ILECs in broadband.

Copps issued similar warning: “Other decisions are hurtling toward us,” including one where “in a few short months, maybe sooner, we will consider whether to deregulate broadband entirely by removing core communications services from the statutory frameworks established by Congress.” He said FCC also would determine whether ILECs should be viewed as nondominant in broadband: “I hope we would proclaim today that we will not overturn these unbundling obligations in those proceedings over the next few short months. But I caution that it could indeed happen.”

“Unfortunately, you had the Democrats striking a Faustian bargain to preserve UNE-P at the expense of line sharing,” Baker said. Colleton said ISPs in her group would convene and examine legal strategies. Ashdown said “I definitely plan to go in the next month [to the FCC] with ISPs” and argue that killing line sharing “closes one of 2 doors” to ISPs and further deregulation being proposed could close other door. Congress also could step in. House Judiciary Committee ranking Democrat Conyers (D-Mich.) said that with its line-sharing action, FCC “approved what the Congress rightfully rejected last year.”