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Verizon: Old Rules Slow Broadband Rollout

WASHINGTON -- The federal government's policy of applying old rules to a new system of digital telecommunications is hamstringing the deployment of broadband, a top Verizon said Tuesday.

Tom Tauke, senior vice president of of public policy for the carrier, told the 2004 Broadband Summit that "maybe" the current rules "made sense" in the telephone arena, but they should not apply in the U.S. broadband world, when the country ranks 11th in the world in deployment of broadband, behind Korea, Japan and other nations.

Organized by Internet2, the consortium of 200 universities, the Broadband Summit aims to highlight specific broadband policies that the Bush Administration and Congress will support.

A Pew Internet and American Life study released Monday found that 55 percent of American Internet users have access to broadband either at home or in the workplace. Thirty-nine percent of U.S. online users have broadband access at home. Despite that growth, the U.S. ranks only 11th in the world in broadband deployment behind Korea, Japan and other developed nations.

According to the Brookings Institute "universal broadband deployment" could pump $300 billion in the U.S. economy annually, but Tauke said U.S. broadband deployment will lag so long as current laws reflect old policies.

"This is a world based on the notion that there is a utility which has a monopoly, which is going to provide all services to all consumers and policy makers will regulate the way that business is run in order to achieve certain social goals," Tauke said.

Today, the actual network is often divorced from services such as Internet telephony.

"Vonage has no network and if Microsoft offers Voice over Internet protocol , they are not going to be making investments in the network infrastructure," Tauke said. "The networks are not necessarily tied to the services being offered over the network. That makes this a very different ballgame. Not necessarily a bad ballgame, just a very different one."

Tauke said Verizon is aggressively rolling out wireless services but current wireline rules create disincentives for investment. Under the 1996 Telecommunications Act, Baby Bells like Verizon and BellSouth are required to share dial-up copper lines with competitive local exchange carriers and ISPs.

The Federal Communications Commission (FCC) has ruled the Baby Bells, as common carriers, must also share their DSL lines while exempting high-speed lines like fiber. Cable companies that offer broadband modems, on the other hand, are considered "information services" by the FCC and do not have to share their lines. Court battles have been raging for years over the various FCC interpretations of the Telecommunications Act.

"Right now we are struggling as a company on the wireline side of the business with a policy structure on the federal and state levels which disincentives investment," Tauke said. "The bottom line is that the world has changed dramatically from the world of the telephone but the rules are still grounded in the days of the telephone."

As a result, Tauke contended, "We have rules which tell us that if we build network facilities, we have to share those facilities at a low cost rate to our competitors. We are told that we when we offer services, we have to have the price regulated and how we offer them regulated. We have every aspect of our relationship with the customer regulated."

Tauke added, "The most troubling aspect of the public policy world we live in today is that we don't have the adaptation of the rules to the new game we are playing."

Tauke asked policymakers to "step up to the plate and tell us what the rules are that will govern broadband services." His comments were tied to the growing momentum in Washington to tackle telecom reform the next session of Congress.