FCC Ruling Falls Short

Chairman Michael Powell dissents with vote, warning against higher Internet access costs.

The Federal Communications Commission last month handed Regional Bell Operating Companies a regulatory windfall that Congress refused to confer, despite three years of aggressive and expensive RBOC lobbying. Having secured from appointed bureaucrats greater changes than the nations elected representatives were willing to consider, logically the RBOCs should be pleased with their win. But theyre not; they plan to sue the FCC.

In a jumbled vote dividing the five FCC commissioners in myriad ways, the agency decided Feb. 20 to let RBOCs effectively bar rivals from using new, broadband facilities deployed in the local telecommunications network.

In addition, in an unanticipated development for ISPs—one that commissioners themselves conceded was a trade-off for maintaining the status quo in voice competition—RBOCs in three years will no longer have to share the data delivery portion of their legacy copper wire with broadband carriers. The move came as a defeat for FCC Chairman Michael Powell, who opposed the decision.

Competitive carriers will likely challenge the FCCs decision on the broadband rules, and RBOCs will almost certainly challenge the decision on traditional telephony rules, sources in both camps said. And while large enterprises are unlikely to feel an effect from the shifting sands, small businesses could see fewer competitive offerings as a result of the decision. Most important, perhaps, the Feb. 20 ruling represents an unseemly chapter of telecom policy-making that nobody wants to see replicated.

The FCCs broadband rule changes largely mirror legislation that RBOCs fiercely fought for on Capitol Hill for three years. Sponsored by U.S. Reps. Billy Tauzin, R-La., and John Dingell, D-Mich., the failed legislation would have deregulated new RBOC broadband investment while preserving rivals access to existing copper wire. RBOCs argued that the FCCs rules forced them to lease parts of their network below cost, hampering their financial ability to upgrade the network infrastructure for advanced broadband services.

The bill spurred an exceptionally expensive lobbying war, complete with radio and newspaper advertising, and dominated the telecom debate in the 107th Congress. RBOCs were able to secure passage of the Tauzin-Dingell bill in the House of Representatives, but they could not overcome opposition in the Senate, and the bill died.