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Powell: 'Hot' Future for Telecom

The head of the Federal Communications Commission (FCC) continues to see the government in a hands-off position for the most part when it comes to regulating the telecom industry.

Chairman Michael Powell reiterated his belief in the power of innovation over regulation to a crowd of hundreds of industry manufacturers and providers attending this year's Supercomm trade show in Chicago Tuesday.

"I think the [telecom] industry will be hot next year," he said. "With the economy recovering, there will be a dramatically increased deployment of broadband this year and as demand grows, the infrastructure that supports broadband will grow with it."

Powell himself has drawn a lot of heat from critics for his oft-spoken and long-standing criticism for the 1996 Telecom Act, a piece of legislation that tried to give start-up telephone and DSL carriers a competitive edge with incumbent carriers like SBC Communications and Verizon Communications .

Powell pointed out the Act doesn't take into account the new technologies available today. With cable providers providing phone service and telephone companies providing TV content and video on demand (VOD), the old rules don't apply.

Back when the first telecom regulatory measures were put in place, he said, there was one piece of technology for one service, like the PBX for telephone service or the coaxial cable for cable TV.

But today's networks are increasingly turning towards fiber optics, which will radically change the environment. With the bandwidth fiber brings to the table -- up to 30 Mbps download speeds compared to DSL's 1.5 to 3 Mbps -- everything, from telephones to high-definition TV to PCs will run under one technology.

"I don't think people realize how revolutionary IP really is," Powell said. "The FCC does everything it can to stimulate new technologies. Regulatory agencies are good at looking back at what they've done, but not looking forward. We have an obligation to the industry [because] we indirectly incubate new companies [with our decisions]."

A good example of that, he said, was SBC Communication's announcement Tuesday morning to invest $6.2 billion in fiber optic deployments to businesses and homes in their coverage area in the next five years.

"Halleluiah," was Powell's first reaction to the announcement when asked for a comment. "I watch all companies -- whether it's a local ISP or a large company like SBC -- and this is the type of investment I've been looking for, so that the consumer has access to next-generation services."

Critics, however, see the innovation and investments coming at the cost of competition. With the likely expiration of the UNE-P rule -- which lets state Public Utility Commissions (PUC) set the rates competitors can access incumbent telephone facilities -- at the end of the year, it could spell trouble.

Ed Whitacre, SBC chairman and CEO, told Supercomm attendees his company would not unilaterally raise the fees for competitors this year. He said nothing about next year. It's possible the $6 billion fiber investment could be partially offset by increased fees to CLECs , which are already fighting a DSL pricing war with SBC, which dropped its DSL pricing earlier this year.

Powell said that, for the most part, state PUCs are going along with the expiration of UNE-P rules, but some are still clinging to the old regulations and say they will fight to keep them in place.

"There are a handful of states that want more regulations, which I think is a grave mistake," he said, "a very grave mistake to the detriment of our country."