FCC Zaps Broadband Carriage Regs

A new FCC order will relieve telco broadband players from sharing their loops with unaffiliated ISPs

August 5, 2005

3 Min Read
FCC Zaps Broadband Carriage Regs

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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