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Verizon's Broadband Regulatory Relief

Verizon Communications scored a major victory Monday when a sharply divided Federal Communications Commission (FCC) approved the telecom giant's petition to deregulate its commercial broadband lines.

The decision frees Verizon from FCC common carrier obligations to provide access at regulated "just and reasonable" rates to commercial competitors and potentially eliminates Verizon's obligations to the Universal Service Fund.

In August, the FCC voted to free Verizon of its DSL line-sharing obligations with competitors in the residential market.

Under both FCC orders, residential and commercial rates to access Verizon's lines will be determined by the market.

"Promoting broadband deployment is one of the highest priorities of the FCC. To accomplish this goal, the commission seeks to establish a policy environment that facilitates and encourages broadband investment, allowing market forces to deliver the benefits of broadband to consumers," FCC Chairman Kevin Martin said in a statement.

The two Democrats on the FCC disagreed with the decision.

"In effect, we provide industry the pen and give it the go-ahead to rewrite the law," Commissioner Michael Copps said in a statement.

"Congress instructed this agency to implement the law; it did not tell us to delegate far-reaching policy changes to the companies that fall under our jurisdiction. It is end users, particularly small business consumers, who will suffer the consequences.

Commissioner Jonathan Adelstein added, "This course raises the specter of price hikes and fewer choices for businesses, banks, universities, government agencies and other high-volume users of communications services."

Following the procedures of the FCC, the Verizon decision was made without a vote of the commissioners and is not subject to agency appeal, although the ruling is open to legal challenges outside the FCC.

In December 2004, Verizon filed a petition with the FCC seeking relief from its commercial line-sharing obligations. FCC rules dictate that if no action is taken after a year to deny a petition, the request is approved.

After Verizon amended its petition, the deadline for FCC action was March 20. No action was taken.

"Today, we take another step in establishing a regulatory environment that encourages such investments and innovation by granting Verizon's petition for regulatory relief of its broadband infrastructure and fiber capabilities," Martin said.

"This relief will enable Verizon to have the flexibility to further deploy its broadband services and fiber facilities without overly burdensome regulations."

Copps said he was "deeply disappointed" by the FCC's action.

"This sweeping outcome is unaccompanied by any regulatory footsteps," he said. "Here we permit a forbearance petition go into effect that erases decades of communications policy in a single stroke…This is not the way to make environment-altering policy changes."

Martin said that while a majority of the commissioners "did not explicitly grant today's relief," the decision continues the FCC's "policy to encourage new investment."