Congress Awaits FCC on Broadband

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Some lawmakers on Capitol Hill are voicing frustration that broadband policy at the Federal Communications Commission remains in limbo.

In March 2002, the agency broadly declared its intent not to regulate cable-modem service. But key pieces of the policy are still being debated by FCC officials.

Later that year, the FCC articulated the same hands-off approach with regard to digital subscriber line service, but again, the agency failed to supply the details.

Lastly, five months ago the FCC voted not to require the Baby Bell phone companies to unbundle their high-speed fiber links to homes and offices for competitors' use. The political turmoil surrounding the decision — FCC chairman Michael Powell voted against portions of it — was such that the written order, adopted Feb. 20, has yet to see the light of day.

'Act now:' Upton

An FCC source last week would not predict whether the order would be released by Labor Day.

"The FCC needs to act now, and I hope the FCC is listening," said Rep. Fred Upton (R-Mich.), chairman of the House Subcommittee on Telecommunications and the Internet.

Many lawmakers view broadband as the engine that will drive economic growth over the next decade, if not longer. Rep. Billy Tauzin (R-La.), the House Energy and Commerce Committee chairman, and Upton want network owners, such as cable and phone companies, to decide for themselves who may utilize their facilities without government intervention. In their view, risk capital won't flow to broadband if FCC rules include access mandates at regulated rates.

Right now, FCC rules require the Baby Bells to share their DSL lines with competitors and to comply with other regulatory obligations, including the contribution of revenue to the fund designed to keep local phone rates affordable nationwide.

Cable-modem service, by contrast, has none of those obligations. As a result of the FCC's March 2002 ruling, cable operators no longer pay franchise fees on cable-modem revenue, saving the consumers millions of dollars a year.

"Government policy is unfair. It's wrong and its outdated," said Tom Tauke, senior vice president for public policy and external affairs at Verizon Communications Inc., the Atlantic coast Baby Bell stretching from Maine to Virginia.

Testifying before Upton's panel last Monday, Tauke said the company needs an unambiguous declaration from the FCC that it will afford comparable regulatory treatment to DSL and cable modem service.

"We are not a monopoly in the broadband marketplace. We are a competitor who is trying to fight for market share and deliver new services," Tauke said, noting that cable has about 60% of the high-speed data market, with 12 million subscribers.

Some industry players agree that cable-modem and DSL service should be regulated similarly, but their idea of regulatory parity means that the FCC should require cable and phone companies to provide wholesale access to competing Internet service providers.

EarthLink Inc., a provider with 5 million data subscribers but no last-mile facilities to the home, argues that cable and phone companies provide a telecommunication service that by law must be made available to competitors at nondiscriminatory rates.

Rep. Edward Markey (D-Mass.) supports EarthLink.

"If we are to realize the full potential of the information, all telephone and cable networks should be opened and unbundled," Markey said. "If some networks are open and others are closed, we risk creating a tangle of private toll roads, not an open highway."

National Cable & Telecommunications Association president Robert Sachs said his trade group has not taken a position on DSL regulation, except that the NCTA opposes regulatory parity if it means cable has to open its lines because the FCC wouldn't remove that requirement from the Bells.

'Regulate down:' Sachs

"In the absence of market failure, and there is none in the broadband market, any government intervention should be aimed at deregulatory parity — that is, regulate down, not up," Sachs testified.

Another challenge facing cable at the FCC is a regulatory effort by a coalition that includes Microsoft Corp. and Amazon.com. Inc. The Coalition of Broadband Users and Innovators (CBUI) wants the FCC to ensure that broadband network owners do not discriminate against unaffiliated Web merchants and content providers.

"A consumer attempting to reach the Web site for Joe's Pizza might find access blocked or impaired by a network operator that has a contract with David's Pizza," Paul Misener, Amazon's vice president for global public policy, told Upton's panel.

Cable has dismissed CBUI's lobbying as a cure in search of problem, because the group has failed to produce concrete examples of nefarious cable-operator meddling.

Although Sachs said cable operators have no plans or desire to engage in the conduct condemned by CBUI, he declined when asked by Markey to promise that cable operators would never use network control to deny consumers unfettered access to the Internet.

Sachs said it was "a little hard to make a blanket representation" with no cable company CEOs in the room with him.

Robert Pepper, chief of the FCC's Office of Strategic Planning and Policy Analysis, said the broadband market was young, vibrant, and growing, an unlikely candidate for regulation that typically gets applied to monopolies.

"We see this as a market that, in fact, is one that we believe we should not impose costly, burdensome regulations that are going to create disincentives to invest in, unless there is a demonstrable, specific, identifiable problem," Pepper said.

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