Copyright 2003 Knight Ridder/Tribune Business News
Copyright 2003 San Jose Mercury News
San Jose Mercury News…02/20/2003
Washington—The Federal Communications Commission is set to vote today on a controversial plan to revise regulations requiring the Baby Bell local phone companies to share their networks with rivals. The vote would be one of the most significant decisions for the telecom industry since it was opened to competition in 1996.
Coming after a year of fierce debate over how to promote local phone competition and broadband growth, the vote has pitted the country’s largest and most powerful telecom and technology companies against one another. Although haggling over the decision continued late Wednesday, it appears that both sides in the battle will get some, but not all, of what they want.
On one side are the Baby Bells, which argue that the network-sharing rules discourage them from investing in their systems. On the other side are long-distance giants AT&T and WorldCom as well as small upstart companies, which maintain that the current rules are critical for driving competition.
Silicon Valley is focused most closely on the fight over broadband. A coalition representing 15,000 tech companies has teamed up with the Bells to push for deregulation of new broadband networks, in the hope of spurring new high-tech investment.
Today’s vote comes just as the FCC’s existing regulations are scheduled to expire after a federal appeals court struck down the rules last year. In recent weeks, it has become clear that FCC Chairman Michael Powell has been unable to muster the three-vote majority he needs to push through his agenda, which would eliminate many of the Bells’ network-sharing obligations. As of late Wednesday, industry sources said, it appeared that a compromise proposal backed by Commissioner Kevin Martin stood the best chance of passing.
The five-person commission is expected to largely preserve rules requiring the Bells — including SBC — to lease pieces of their older copper phone networks to rivals at discounted rates. Among the network piece-parts that the Bells must now make available to rivals are the so-called local loops of wires going into homes and the transport connections between phone company switches.
“We are cautiously optimistic because we think the FCC will confirm that the Bells have to make loops and transport available,” said John Windhausen, president of the Association for Local Telecommunications Services, a trade group representing competitive carriers.
The FCC is also expected to leave to individual states much of the decision-making over how those rules are implemented and what price the Bells can charge for access to their systems. The states have been fairly aggressive in trying to promote local phone competition.
This part of the decision would be a bitter disappointment for the large local phone companies, which thought their deregulatory goals were within reach since they have an important ally in Powell. Powell shares the Bells’ view that the only way to promote true telecom competition is to encourage rivals to build networks of their own, rather than lease the Bells’ lines.
Still, it appears the Bells will win an important part of the battle, since the commission is also expected to deregulate the Bells’ new fiber networks — essentially freeing them of obligations to share their broadband systems with competitors.