FCC Chief Thinks Bells Will Invest in Fiber

WASHINGTON — Federal Communications Commission (FCC) Chairman Michael Powell told a Congressional panel Wednesday he believes the regional Bell operating companies will begin investing in high-speed fiber lines despite the Bells recent vows not to do so.

Last Thursday, a sharply divided FCC ruled the Bells will no longer have to share their high-speed fiber lines with broadband competitors but also decided the Bells would have to continue to share their local voice copper lines. The Bells reacted by warning that innovation, jobs and new investment in new fiber lines will suffer if they are forced to continue offering their local lines at a discount to competitors.

“We’ll see. I think we’re seeing a period of bitter reaction. It’s a public affairs reaction, not a boardroom reaction,” Powell told the House Energy and Commerce Subcommittee on Telecommunications and the Internet. “At the end of the day, the economics will be more compelling.”

Powell told the subcommittee “I am as disappointed as you” by the Bell stance and characterized their position as a “crybaby reaction.” He also referred to the high-stakes political fight over local phone service rules between the Bells and their competitors such as Sprint and MCI as a “passion play involving billion dollar players.”

Nevertheless, Powell, who voted against requiring the Bells to continue sharing their local lines, said the FCC “chose a course in some of its decisions that will cause further unrest for the (telecom) industry with the ultimate loser being the American public.”

Powell’s position was loudly echoed by the Republican majority on the subcommittee.

“Was it a good decision? Hello Washington, this is Wall Street calling, the answer is no,” Rep. Fred Upton (R.-Mich., chairman of the subcommittee, said. “Clearly the reaction from Wall Street the last few days should convince us that the FCC’s decision has created confusion and concern. We even have analysts talking about key telecom equipment makers and innovators as Lucent as ‘dollar stocks’ and this decision seems to have spooked investors even further.”

Upton added the FCC “had the chance to provide certainty” for investors but, instead, “provided uncertainty” when it decided to give the state public utility commissions the power to make deregulatory decisions about the Bells’ local service requirements.

“The Commission seems to have adapted a chaotic mix of often conflicting rules that in one instance seem to promote investment and growth and on the other hamstring it in a morass of what will likely be 52 proceedings around the country,” Upton said. “The Commission, I believe, should have focused on promoting clarity, certainty, investment and growth. If they had used these objectives as their touchstones, I believe they would have come up with an order that reduces, not increases, unbundling; reduces, not increases, regulatory procedures; and is based on a national framework.”

Rep. Ed Markey (D.-Mass.) took the Democratic viewpoint supporting the FCC decision to continue to require the Bells to share local lines but was critical of the broadband ruling.

“For those interested in the future of broadband competition and the prospects for job growth and innovation in the digital era, the broadband policy decisions in the FCC decision are deeply troubling,” Markey said. “Given the response of the Bell companies after the FCC rendered its decision, it’s clear that the result for the economy will be devastating.”

Markey said, “Any small, glowing ember of an economic recovery for the sector that existed has been effectively doused by the bucket of cold water the Bells threw on it after the FCC decision.”

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