NEW YORK -- As internal strife threatens to derail some important Federal Communications Commission (FCC) policy changes scheduled for next week, some observers believe that FCC Chairman Michael Powell will be able to push through his pro-incumbent intiatives.

In the last week leading up to an important vote on Unbundled Network Elements (UNE) regulation, Powell has encountered some resistance to his pro-incumbent deregulatory agenda, says Blair Levin, a former FCC chief of staff and now managing director of regulatory analysis at Legg Mason Inc. Levin was speaking at a Legg Mason telecom conference held here yesterday.

"He didn't have enough votes," said Levin, speaking of the vote on UNE that was postponed this week until next (see FCC Delays UNE Ruling). But Levin said that ultimately, rule changes will prevail that will help the incumbent providers by freeing them of some of the requirements to share their networks at wholesale prices.

"I think they will get it done," said Levin. "It will be a signficant victory for the RBOCs."

Next week's meeting includes the key vote on the regulation of UNE, which requires incumbent carriers to provide competitors with low-cost access to their network infrastructures. The vote was scheduled for this week but was postponed for a deadline of Feb. 20.

As reported in a new report from Light Reading’s paid research service, Optical Oracle, a division within the FCC has blocked a pure version of Powell's vision -- which includes clear benefits for the incumbents. Most insiders believe that FCC Commissioner Kevin Martin has been the point man in undermining Powell's agenda at the five-person board, and that Martin will demand that pieces of UNE are preserved in some way, potentially by handing the decision on the matter over to individual states.

Regardless, incremental changes are likely to help the RBOC position. "A lot of it will depend on the details," said Levin, who noted that the full details of the FCC's policy changes won't be known for several months.

Another second policy matter -- broadband regulation -- isn't likley to be decided until later in the year, concludes the report. Chairman Powell is seen as a major champion of regulatory “parity,” whereby similar services receive similar regulatory treatment. Right now, that doesn’t happen -- because cable broadband and copper-based DSL are treated in distinct manners. Expect the FCC to switch the classification of ILEC DSL services as information services, from Title 2 to Title 1. That change would benefit incumbents by releasing their obligation to unbundle and share their DSL facilities with competitors. Expect a decision on this sometime in the spring.

The full Optical Oracle report, "Fed Watch: U.S Regulatory Outlook," covers the topic in detail, profiling the commissioners and detailing the possible divisions within the FCC. It is available for sale here.

— R. Scott Raynovich, US Editor, Light Reading

Editor’s note: Light Reading is not affiliated with Oracle Corporation
(Nor is it affiliated with the Coracle Society.)