RealTime IT News

SBA Rejects FCC's Broadband Plan

The U.S. Small Business Administration (SBA) called on telecom regulators Tuesday night to drop their plans to reclassify high-speed Internet service as an "information service with a telecommunications component," saying the proposed rule would wipe out independent Internet service providers (ISPs) around the nation.

Instead, the Office of Advocacy proposes digital subscriber line (DSL) service be broken into two components -- one covering the transmission of broadband signals as a telecommunications service and the other with Internet access as an information service.

In a critical letter sent to Michael Powell, Federal Communications Commission (FCC) chairman, the SBA stated ISPs are almost completely dependent on incumbent local exchange carriers (ILECs) for broadband services.

"This dependence is born from 80 years of government-sanctioned monopoly that enabled incumbent wireline carriers to construct a pervasive network to almost every home and business in the nation," the letter said. That ownership, it continued, "grants the incumbent carrier a near monopoly in residential areas and a substantial economic advantage in business districts."

Powell is a huge proponent of the broadband duopoly, a system where cable and DSL services fight each other and subsequently spur broadband growth across the U.S. while driving down prices to remain competitive. He believes the market, not government, should dictate who those players are when it comes to competition.

The four ILECs -- Verizon Communications , SBC Communications , BellSouth and Qwest Communications -- have lobbied hard at the FCC and on Capital Hill to ease restrictions placed on them by the Telecom Act of 1996.

Responding to Bell pressure, Powell and the FCC instituted the broadband redefinition. The NPRM has a comment period and advocacy groups and Bells alike have been chiming in with their thoughts on the issue.

What's clear is the fact the U.S. needs to spur broadband services soon, or risk falling behind the rest of the world. According to a new report by Point Topic, a U.K. firm tracking worldwide DSL adoption rates, the U.S. ranks 17th in the world in broadband adoption rates.

Despite the fact one million Americans have signed up for DSL in the past six months, it still is used by only 2.73 percent of telephone users. The number is meager, compared to the "powerhouse" DSL countries like South Korea and Taiwan, which have a 26 and 11 percent adoption rates, respectively.

High prices and the dearth of broadband choice in rural and small towns have made DSL growth in the U.S. slow. The Bells blame the current economy and too-stringent regulations, while ISPs and competitive LECs (CLECs) blame the Bells for foot-dragging.

The SBA, and numerous advocates, both agree the FCC's proposed rules will further inhibit broadband growth, putting the onus on four telephone carriers to deliver broadband throughout the U.S.

"In the Internet field, it was the competitive forces of thousands of ISPs, many of them small, who brought the World Wide Web and e-mail to consumers," the SBA's letter stated. "When there is a lack of competition, innovation stagnates, and so will the deployment of broadband."

The SBA feels the FCC rules will essentially wipe out the independent ISP industry of some 7,000 small businesses, resulting in a combined loss of $8 billion in lost revenues; revenues that would find itself in the hands of the remaining carriers.

The New Networks Institute, an industry watchdog, said that loss would also affect the 10-15 million users who use independent ISPs for their Internet access.

"The FCC has not taken the time to do the proper analysis nor actively included small ISPs and CLECs," said Bruce Kushnick, New Networks president. "And we noted (in comments to the NPRM) that the FCC has failed to properly enforce the laws that protect competitors. This has helped to create the collapse of competition and the telecom sector, which has directly impacted the entire economy."

FCC officials were unavailable for comment at press time.