Bells Free From DSL Obligations

The Baby Bells can pop the cork on the chilled champagne. In a significant
policy victory for the incumbent carriers, the Federal Communications
Commission (FCC) unanimously voted today to eliminate DSL line-sharing

The vote came just 39 days after the Supreme Court upheld the FCC’s
authority to declare cable modem broadband an information service not
subject to the myriad rules and regulations faced by the Bells’ high-speed
broadband offering.

Today’s vote by the two Republicans and two Democrats on the FCC (the fifth
position is currently vacant), puts the Bells’ broadband DSL service on
equal regulatory footing with the cable companies.

To ease the transition for Internet service providers (ISPs), such as
EarthLink , that lease discount lines from the incumbent
carriers, the FCC imposed a one-year transition period on the Bells in which
they must continue to offer discount line prices to competitors.

After that, EarthLink and other ISPs will have to negotiate wholesale prices
with the Bells. The one-year clock is expected to start ticking sometime in
early October.

FCC Chairman Kevin J. Martin called the agency’s action “momentous” and said
it would level the playing field between cable companies, the current market
broadband leader, and telephone companies.

“It ends the regulatory inequities that currently exist between cable
companies and telephone companies in their provision of broadband Internet
services,” Martin said, adding the vote is an “implicit recognition that the
telecommunications marketplace that exists today is vastly different from
the one governed by regulators over 30 years ago.”

Martin said today’s broadband market is characterized by multiple platforms
that are “vigorously competing for customers. Such changed market conditions
require … a fresh analysis.”

In addition to the one-year transition period to wean ISPs off the
government-set discount rates for Bell DSL lines, the FCC is also requiring
the incumbents’ high-speed service to continue to contribute to the
Universal Service Fund (USF) for nine months or until new rules are in

“Either way, the [FCC] will act diligently to ensure that there will be no
adverse impact to the fund as a result of the holdings today,” Martin said.

While the decision was unanimous, at least Commissioner Michael Copps’ vote
was begrudging.

“I objected strenuously to our original reclassification of cable modem and
our tentative reclassification of wireline broadband,” he said. “But the
Supreme Court has fundamentally changed the legal landscape.”

Copps and other critics of closing the broadband networks of telephone and
cable companies fear a possible duopoly controlling network content.
Incumbent telephone companies and cable companies control more than 90
percent of the U.S. broadband market.

Public Knowledge, a public-interest advocacy group, issued a statement
expressing disappointment with the FCC vote.

The group’s legal director, Mike Godwin, said the FCC “did not take all the
necessary steps to ensure that broadband networks remain open as service
providers continue to be deregulated …. We believe consumers and the market
would have benefited if the FCC had included an openness requirement in the
order itself.”

Instead, the FCC issued a policy statement that has no force of law behind

The statement calls broadband providers to preserve and promote the open and
interconnected nature of the public Internet. The FCC statement also says
consumers are entitled to access the lawful Internet content of their choice
and they should have the freedom to run the applications and services of
their choice.

Not surprisingly, the Bells were delighted with the ruling.

“Today’s ruling is a significant accomplishment by the FCC,” James C. Smith,
SBC senior vice president for FCC issues, said in a statement rushed out
only minutes after the FCC vote. “The benefits of this ruling will ripple
across our communities by encouraging greater investment in and a wider
rollout of broadband networks.”

He added, “Discarding decades-old requirements and regulatory assumptions
that are out of sync with today’s competitive broadband marketplace will
also spur more innovative products and services for consumers.”

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