Light Reading

FCC Zaps Broadband Carriage Regs

Light Reading
News Analysis
Light Reading
8/5/2005
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The U.S. Federal Communications Commission (FCC) Friday removed the responsibilities of telephone companies to share their broadband loops with unaffiliated ISPs.

The order is meant to put telco broadband providers on equal regulatory footing with their cable modem competitors. The Brand X decision in June relieved the cable guys of sharing their broadband facilities (see Supremes Sing Cable's Praises).

Sources say the FCC has been ready to make today’s order since the Powell days, but needed affirmation from the Supreme Court in the Brand X case before issuing an order.

Specifically, the FCC ruled that the physical facilities that deliver broadband, and the broadband service itself are indistinguishable and inseparable. The two things together -- the facility and the service -- are now called an “information service.” The “facility” part of that service can no longer be separated and called a “telecommunication service,” and as such can't be subject to common carriage rules.

But that’s just the small print. The real question is whether or not today’s order will really spark more aggressive fiber and DSL buildout by the RBOCs (see BellSouth Fans Fiber Flames). The RBOCs have found broadband (and the services it makes possible) to be far more profitable than voice service, yet the Bells have cited “regulatory uncertainty” as a barrier to faster broadband deployment.

BellSouth Corp. (NYSE: BLS) stated shortly after the Brand X decision that it would increase fiber deployment by 60 percent if the FCC went its way in today’s decision (see Supremes Sing Cable's Praises).

But BellSouth's message is a bit different today. “Well, I don’t know about fiber -- we’ve already done so much of that already,” hedges BellSouth spokesman Bill McCloskey.

“It will certainly help us move some of our consumer services out of the lab more quickly," McCloskey continues, "and it will help with our ability to see our way clear to profitability -- well, profitability’s probably not the right word -- but to roll out service into the rural areas faster."

The RBOC has said it will pass 200,000 new homes with fiber by the end of this year.

SBC Communications Inc. (NYSE: SBC) was equally noncommital. “We’ll assess our broadband deployment plans and make changes accordingly,” says SBC spokesman Mike Balmoris. "But we're not making any announcements on that today."

Verizon Communications Inc. (NYSE: VZ) was not immediately available for comment in the wake of the FCC’s action (see Verizon Expands FTTP Plan).

The National Cable & Telecommunications Association (NCTA) applauded today’s order, saying “fair is fair,” but took the opportunity to get in a shot about the telcos' efforts to get out of video franchising obligations (see SBC on TV Franchise Regs: We're Immune).

“We invite the telephone companies to... drop their self-serving demands for special treatment by the government when entering the video marketplace," says NCTA CEO Kyle McSlarrow.

The real losers here may be the ISPs (see RBOCs Clear (Another) Regulatory Hurdle). However, the ISPs have not faired well in competition against cable and telco for broadband subs – they control less than a tenth of broadband lines today.

Under the order, the LECs will continue providing ISPs with access to broadband facilities for another year. Also, the telco broadband providers will continue to contribute to universal service funding mechanisms at current rates while the commission works on new regulations specific to that issue.

— Mark Sullivan, Reporter, Light Reading

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OldPOTS
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OldPOTS,
User Rank: Light Beer
12/5/2012 | 3:06:22 AM
re: FCC Zaps Broadband Carriage Regs
Looks like the Telcos and Cabelcos had the FCC lock out other competition. Now for the RBOC slow roll, since they were not forced to make a commitment. And since they hope to cherry pick those served.

Freezing out the municipalities ("information services") is next. rjm?

OldPOTS
palaeozoic
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palaeozoic,
User Rank: Light Beer
12/5/2012 | 3:06:22 AM
re: FCC Zaps Broadband Carriage Regs

The only true competition faced by the telcos is, in fact, the cable guys. And vice versa. CLECs and ISPs availing themselves of unbundled loops was never a form of competition; rather it was legislative boneheadedness.

What the FCC is saying is "If you want to compete, build a network. We're no longer going to force ILECs to lease you theirs."

Finally, sanity from the FCC.
aaron.glenn
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aaron.glenn,
User Rank: Light Beer
12/5/2012 | 3:06:21 AM
re: FCC Zaps Broadband Carriage Regs
How do you think the I in ILEC got there? The network RBOCs are basing their revenue on was built and subsidized by the American taxpayer; and therefore carry the burden of sharing it at a reasonable price.

This is insanity.
OSXman
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OSXman,
User Rank: Light Beer
12/5/2012 | 3:06:20 AM
re: FCC Zaps Broadband Carriage Regs
Kindly explain how they were subsidized by the taxpayer.

The network was originally builty by AT&T. Enough years have gone by that much of the network was probably built by the Baby Bells themselves. While AT&T was a monopoly, the Baby Bells are private corporations funded by shareholders and bondholders. AT&T, regulated monopoly or not, was also financed by stock and bondholders.
OldPOTS
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OldPOTS,
User Rank: Light Beer
12/5/2012 | 3:06:20 AM
re: FCC Zaps Broadband Carriage Regs
'What the FCC is saying is "If you want to compete, build a network. We're no longer going to force ILECs to lease you theirs."'

Then the FCC and RBOCs should have no problem with municipalities building a common network available to all SPs.

OldPOTS
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:06:19 AM
re: FCC Zaps Broadband Carriage Regs
Then the FCC and RBOCs should have no problem with municipalities building a common network available to all SPs.

The FCC can't base a policy on municipalities building out real broadband. It's too much of a long shot. The RBOCs, on the otherhand, seems to have hired too many lawyers and lobbyists who don't have anything better to do but get in the way of a few little guys trying to improve their communities.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:06:19 AM
re: FCC Zaps Broadband Carriage Regs
Looks like the Telcos and Cabelcos had the FCC lock out other competition.

I think the FCC is trying to eliminate the state PUCs as rate setting bodies as well. They also may have hopes that they might stimulate investor interest towards infrastructures upgrades if they permit private unregulated monopolies for the incumbents. Time will tell if this approach will solve the US broadband problem or not. I don't think it will and my guess is the FCC doesn't have a backup plan in the event their policy doesn't work out.

(Note: Ensign's bill defines broadband as anything above 64Kbs and doesn't mention internet style open access - so "broadband" is being redefined per the incumbents ignoring things like Moore's and Metcalfe's laws. A problem the US faces is that Asia is building out the real stuff hence next generations here will be at a disadvantage.)

Now for the RBOC slow roll, since they were not forced to make a commitment. And since they hope to cherry pick those served.

I think the RBOCs may do a "no roll" when it comes to fiber based, real broadband for residences. The economics don't pay for the new outside plants. They'll probably only run fiber to industry parks where they can get an ROI.

Freezing out the municipalities ("information services") is next. rjm?

It's sad that this happening. Many (most) municpalities are struggling to find ways to pay for things like sidewalk repairs so the issue of real broadband is far from being on their radar. Incumbents have too many lawyers and lobbyists who'll even block an extreme long shot. We're all the worse off for these behaviors which don't add value to a society.
dslguy76
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dslguy76,
User Rank: Light Beer
12/5/2012 | 3:06:19 AM
re: FCC Zaps Broadband Carriage Regs
Can someone give more information as to how this new FCC ruling will affect CLEC's and DLEC's like earthlink and covad in the short term as well as in the long term.

Thanks in advance
st0
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st0,
User Rank: Light Beer
12/5/2012 | 3:06:18 AM
re: FCC Zaps Broadband Carriage Regs
"Finally, sanity from the FCC."
===
after they killed ATT comletly... sad history and excellent example of political damage of the best, most innovative company in US history.... ATT is dead, long live the ATT spirit (still can see the faces of downsized mid 80s Bell lab researches.. force to scatter around in university lab holes... just check NC, UCSB, NYU, MIT, etc.etc.)... The destruction is complete and successful by FCC...Down with all the ATT share holder value....
Not even a word to mention the damage done by them in the past... "no longer"..? Never was...
-st
alchemy
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alchemy,
User Rank: Light Beer
12/5/2012 | 3:06:17 AM
re: FCC Zaps Broadband Carriage Regs
OSXman writes:
Kindly explain how they were subsidized by the taxpayer.

s/taxpayer/ratepayer/

The AT&T monopoly became great by having business and wealthy urban & suburban customers subsidize rural and poor areas. With the infinite money of a regulated monopoly, they were able to fund basic research at Bell Labs.

If you look at the rate of innovation today compared to when stodgy AT&T ruled the roost, today's environment is better for advancing technology but not necessarily the best for having bomb-proof primary line telephony service.

I have Verizon dragging fiber around my town. It'll be decades before they get to rural and ghetto areas. It's rational business sense but not necessarily the best public policy.
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