News

FCC Likely to Punt On Web Unbundling

1/24/1999 7:00 PM Eastern

Washington --The Federal Communications Commission is
expected to adopt a report to Congress Thursday (Jan. 28) that could establish the
predicate for FCC regulation of high-speed Internet services provided by cable operators.

The report, required under the Telecommunications Act of
1996, might include language suggesting that at some point, FCC rules should guarantee
open access to high-speed cable facilities to prevent cable domination of the access
market.

The cable industry is vociferously opposing inclusion of
such language, as are executives from several high-tech firms, including Intel Corp.,
Cisco Systems Inc. and IBM Corp.

Whether or not the language is included, the FCC is not
even close to adopting rules intended to regulate cable's high-speed Internet
activities.

Cable sources said last week that at minimum, they expect
the FCC to seek further comment on the issue, perhaps as a prelude to the adoption of
rules.

One reason why the commission is unprepared to act now is
because proponents of cable access -- including America Online Inc., U S West and others
-- have not clearly defined what they want, a cable source said.

In a speech to telecommunications lawyers last week, FCC
commissioner Susan Ness alluded to the gauzy nature of the current debate.

"We haven't even figured out what questions to
ask, much less what the appropriate answers may be," she said.

Some cable opponents are calling for "unbundled
transport," and others for "interconnection," "resale" and
"nondiscriminatory access." All of these terms are taken from the
Telecommunications Act, and each has its own specialized meaning.

"Unbundling and nondiscriminatory access are not the
same thing," an FCC source said.

Another reason why the FCC is still many months away from
ruling is because the agency is unsure how broad a step it might have to take. Assuming
that the commission was to order cable to open its Internet networks, would the agency
have to set the rates that cable charged to competing Internet-service providers?

"You can't have access requirements like this
without inevitably getting into price regulation," said Howard Symons, a cable
attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo.

Ness, in her remarks, made two points: Right now, it is
premature to treat cable operators like phone companies because Internet services are
"still nascent," but there is nothing wrong with the FCC gathering information.

"I don't think that anyone can responsibly
suggest that we ought not to be asking questions of a wide variety of stakeholders,"
Ness said.

In a related matter, the FCC is also expected to adopt an
order that will allow the Baby Bells to provide data over long distance, but only after
they have established separate affiliates for that purpose -- a move that the telcos have
opposed.

The affiliates would be exempt from unbundling and resale
obligations that normally would apply to the parent telco.

"As we rely more on competition and less on
regulation, telcos should have a 'pro-competitive, deregulatory' option for
participating in this emerging market," Ness said.

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