FCC Halts DSL-Sharing by Telcos

WASHINGTON -- The Federal Communications Commission voted Friday to end regulations requiring incumbent telecommunications carriers to share their DSL broadband connections with competitors.

The FCC, in a 4-0 vote, removed rules that allowed competitors such as Earthlink to offer DSL over lines owned by the four giant incumbent telecom carriers, often called the Baby Bells. While large ISPs such as Earthlink have negotiated agreements in place with the Bells, some consumer advocates and telecom observers predicted that the FCC's decision could kill off DSL service from small ISPs when the DSL network-sharing rules end in a year.

The FCC's decision Friday puts DSL regulation on an equal footing with cable modem service after the U.S. Supreme Court in June rejected a challenge to an earlier FCC decision allowing cable companies to close off their networks to competitors.

Same Rule as Cable

FCC Chairman Kevin Martin called the decision "momentous," predicting that consumers will benefit from a "leveling of the playing field" between DSL and cable modem service.

"I believe that, with the actions we take today, consumers will reap the benefits of increased Internet access competition and enjoy innovative high-speed services at lower prices," he added.

The four remaining Bells inherited much of their telecom networks from the breakup of the old AT&T monopoly in the 1980s. In an effort to spur competition, the FCC and Congress has required them to share parts of their networks with competitors at discounted prices, but in the last two years, the Republican-led FCC has moved away from those regulations.

Baby Bells SBC Communications and Verizon Communications cheered the FCC's decision, saying old rules requiring them to share parts of their networks with competitors discouraged them from investing in new products and offering new services. The decision will help the Bells meet President Bush's goal of nationwide broadband availability by 2007, Verizon said in a statement.

"The benefits of this ruling will ripple across our communities by encouraging greater investment in and a wider rollout of broadband networks," added James Smith, a senior vice president for FCC issues at SBC.

Earthlink noted the current DSL line-sharing rules will stay in place for a year, and the company already has contracts with the Bells to provide DSL.

"We have every confidence we'll be able to extend those [contracts] with them to offer DSL service," said Dave Baker, vice president for law and public policy at Earthlink. "We have hundreds of thousands of customers, and the Bells will want to preserve them."

Consumer Groups Decry Rule

However, consumer groups suggested that DSL customers could have fewer choices among providers if the Bells aren't required to share their networks.

"Changing these rules is ... anticompetitive and will lead to fewer choices in the marketplace, which means higher prices and worse service," said Kenneth DeGraff, a policy advocate at Consumers Union.

DeGraff predicted that small ISPs would have a difficult time offering DSL after the line-sharing rules are phased out, pointing to few network-sharing agreements with cable companies. "They can still hope for negotiations, but how well did that work for ISPs getting on cable networks?" he said.

Consumers Union and Public Knowledge, a technology advocacy group, had called on the FCC to require the Bells to adopt so-called network neutrality policies that would prevent them from blocking Internet content and Web-based applications such as Voice over Internet Protocol (VOIP). The FCC instead adopted a network neutrality policy statement separate from the DSL deregulation order, and both groups said the policy statement lacked weight outside of the DSL order.

The network neutrality policy lacks enforcement provisions, DeGraff noted. "A right without a remedy is not a right," he added.

While voting to adopt the new DSL policy, the commission will also issue a notice of proposed rule-making to further consider the impact on consumers of removing the DSL network-sharing rules.

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