Intel and Nortel say broadband spending may get a boost from Mon.’s Brand X Supreme Court ruling (CD June 28 p1), while other firms see little change from deregulating broadband providers. Intel, part of a lobbying group that backs deregulation of cable and telecom broadband services, says the ruling may stimulate demand for equipment to go online, including PCs. Nortel stood by comments yesterday that Brand X will spur spending.
The Supreme Court overturned a lower court ruling in the Brand X case, backing an FCC decision to treat cable broadband as an information service and not a telecom service. The 6-3 ruling in FCC v. Brand X is a major boost for cable operators. “We've won,” said cable consultant Steve Effros. “The law is evolving with regard to the delivery of data services, but it is clearly evolving toward a deregulatory stance.”
Governors around the U.S. have signed telecom bills on phone deregulation, municipal telecom entry, building access, wireless E-911 and other wireless services. And more legislation is pending on video franchising, competition and PSC powers.
Verizon urged the FCC to deny business user groups’ request that the FCC adopt an interim X factor of 5.3% for interstate special access rates as part of the ILEC price caps formula. The adoption would take effect July 1, when the existing price regulation regime expires (CD May 12 p6). Verizon also challenged an ATX request to reset rates in Phase II areas to price cap levels, bar further rate increase and afford special access customers a “fresh look” enabling them to abrogate their contracts with price cap LECs. The 5.3% factor, proposed in the rulemaking and requested by the eCommerce & Telecom User Group (eTUG) and the American Petroleum Institute (API) Telecom Committee, would apply until the FCC ends the proceeding. “Competition has grown rapidly and prices have dropped,” Verizon said: “There is no basis for imposing arbitrary and severe limits on those rates without even waiting to evaluate the record to be compiled in [the special access] proceeding.” Imposing “intrusive new regulatory measures” on the competitive special access business would harm competition because “it would deter investment by all providers, including incumbent LECs, competitive LECs and inter-modal competitors such as cable and fixed wireless companies,” the company said. Verizon also contested eTUG and API arguments that special access rates are excessive: “The sole support these competitors offer for their position is the tired refrain that ARMIS reports show high rates of return for special access and BOCs have increased certain special access rates in Phase II areas. These assertions have gained no merit by dint of sheer repetition.” Verizon also said: (1) eTUG/API are “wrong” in arguing that use of a special access X factor would enable price cap LECs to avoid reducing special access rates: “Even though the price cap index itself is effectively frozen, rates will go down in economic terms.” (2) eTUG/API are “incorrect” in claiming that the FCC never intended the X factor to remain equal to GDP-PI after the CALLS plan expired: “The Commission contemplated that X would remain equal to GDP-PI beyond the CALLS plan.” (3) Granting the relief sought would be inconsistent with the Telecom Act, because “it would amount to a rate prescription, which the Commission may not undertake unless it first finds existing rates to be unlawful.” (4) Granting the relief would violate the Administrative Procedures Act.
Verizon urged the Cal. PUC to adopt a new regulatory framework for major telecom carriers that would do away with most existing retail price regulation. In comments filed in the PUC’s current rulemaking to reform its regulation of large carriers, Verizon suggested the PUC deregulate rates for retail services other than single- line residential and business basic exchange, Lifeline and 911. All other retail services would be priced to market, and would move as market conditions dictate. Basic exchange, Lifeline and 911 would remain under nonindexed price caps. Verizon urged that the same regulatory regime apply across the board to providers of local service, regardless of whether the service is delivered over conventional wireline, or via wireless, VoIP, cable or other technologies. Verizon’s proposal addressed only price deregulation, and didn’t propose changes to existing service quality regulations and administrative requirements. Verizon said today’s framework was devised 16 years ago, when wireline was the only widespread technology and competition wasn’t a significant factor. Verizon said it’s time the state adopted a new framework that would let competitive market forces work, which would promote investment and innovation by all providers.
The long-awaited Supreme Court ruling in the Brand X cable modem case could come today (Mon.), although many predict the court will take a few more weeks. Meanwhile, players are pondering legal strategies contingent on the outcome, ranging from appeals to the FCC for regulatory action to lobbying efforts to get new federal legislation adopted.
Growing convergence of communications services is pushing FCC bureaus to coordinate more closely, FCC officials said. Speaking at the Broadband Policy Summit Thurs. in Washington, Matthew Brill, aide to FCC Comr. Abernathy, said: “The FCC did a good job in creating Task Forces to cut across the Bureaus and integrate [their] expertise.” The result is a “balanced” approach to rulemakings, he added.
LONG BEACH, Cal. -- A merger may not be on the horizon for XM and Sirius, despite persistent rumors, but an interoperable radio might remove the need for a combination, industry lawyers and financiers said at the International Satellite & Communications Expo here.
Berlin’s successful cutoff of the analog TV service in Aug. 2003 was a key case history for the House Commerce Committee as it compiled its recently released draft legislation setting Dec. 31, 2008, as a hard DTV deadline in the U.S. But a House Telecom Subcommittee hearing on the draft last Thurs. (CD May 27 p1) revealed that Berlin’s smooth imposition of tuner subsidies for low- income families would likely prove a tough act to follow here. Judging from that hearing, it also may represent a make-or-break issue in how DTV legislation advances through Congress.
The FCC is seeking more comment and empirical evidence to aid its examination of cable horizontal and vertical ownership limits, it said Tues. Among issues in the 2nd further notice of proposed rulemaking is a requirement that the FCC set limits on a cable operator’s subscriber reach and the number of its own channels it can run on its system.