States Will Set Telecom Policy

WASHINGTON, D.C.--Broadband lines can stay proprietary to the telecommunications companies that own them, and it's up to the states to rule on sharing phone lines, the Federal Communications Commission has declared.

Thursday's decision came on a court-ordered deadline but was expected a week earlier; FCC Chair Michael Powell had delayed the vote. He unsuccessfully sought support for broad federal deregulation of the telecommunications industry serving homes and small businesses. But three of the five commissioners, including Republican Commissioner Kevin J. Martin, determined instead that letting states set the bar for competition will lead to more affordable phone service and a healthier market.

Telecom Act Retained

"Today's decision is not just a big-ticket item for telephone companies on one side or another of some admittedly arcane issues," said Commissioner Michael Copps. "It affects us all. It will determine the size of your phone bill. It will support or undermine the future of broadband and the Internet. It will deeply affect our country's future."

The resolution largely maintains the 1996 Telecommunications Act, which was designed to cultivate competition in the telecommunications industry. The act allowed Baby Bells, which owned most of the country's phone-line infrastructure, to offer long-distance service if independent long-distance companies such as AT&T could lease their phone lines at rates set by the government.

In this decision, the commission said the regional Bell companies no longer must share their lines, even new ones, with competitors that offer DSL service.

The FCC's report says that state regulators should determine whether operational or economic barriers are too high for the independent companies to lay their own phone lines. The consenting commissioners stressed the importance of setting such "impairment standards" based on geographic and demographic criteria.

"Barriers competitors face in deploying equipment and trying to compete are different in Manhattan, Kansas, than in Manhattan, New York," Commissioner Martin said.

Tough Times

Independent companies like AT&T and Worldcom have argued that installing their own infrastructure is prohibitively expensive, particularly in light of the recent economic downturn in the telecommunications sector.

Jim Cicconi, AT&T's general counsel, said the commission's resolution prevents "remonopolization" of telecommunications markets.

"Consumers will see lower prices and more choices in the marketplace, and the economy will experience more investment and greater innovation," Cicconi said in a statement.

Local telcos, including BellSouth, Qwest, SBC, and Verizon, have said that requirements to lease their lines are a disincentive to building improved networks.

"It's going to add more regulation to an already regulated situation, and it's going to add more uncertainty to an already uncertain situation," said Bob Blau, vice president of executive and federal regulatory affairs at Bellsouth. "I would have thought a commission with a Republican majority ... would have come up with something different as opposed to more of the same."

Bundled Broadband

Despite general support for the vote, independent phone companies and consumer groups are criticizing the commission's decision to end the mandate that competitors get access to the Baby Bells' lines for DSL service. Three of the five commissioners favored letting companies keep their newly installed broadband lines private, saying the rules will encourage companies to invest in high-speed fibers that should speed broadband deployment.

Commissioner Copps said the DSL provision was "playing fast and loose with the country's broadband future, denying it the competitive air it needs to breathe and flourish."

Chair Dissents

Powell called the entire resolution "Picasso-esque," arguing that his fellow commissioners were shirking the charge given them last May by a federal court to overhaul the 1996 Telecommunications Act. He said the rules would create a slew of state and federal court proceedings that would dampen all aspects of the telecom industry.

Industry firms have also sought consistency in regulations.

"The majority has brought forth a molten morass of regulatory activity that may very well wilt any lingering investment interest in the sector," Powell said. "This decision also could prove harmful to consumers in the long run, and I cringe to see their welfare raised on the staff of the majority's decision."