DSL Deregulation OK'd in BellSouth Territory


South Carolina has become the second state to enact a telephone company-backed law to prevent regulation of its broadband services by state utility authorities.

The bill, signed by Republican Gov. Mark Sanford, allows the South Carolina Public Service Commission to continue to review facilities that are used for both narrowband and broadband services, and monitor income from broadband services to compute the providers' share of the state's Universal Service Fund.

That's the extent of the state's authority — a policy change that benefits the state's dominant telephone provider, BellSouth Corp.

Sanford signed the bill March 12. South Carolina joins Oklahoma, where SBC is the dominant provider, as the only states to date to approve such a measure. But SBC is promoting similar legislation in 13 states in which it operates.

Lobbyists for the telco note that cable's high-speed-modem service has the penetration edge over SBC's digital subscriber line service.

But they say SBC and affiliated companies, including Ameritech Corp., aren't encouraged to step up investment in DSL deployment as long as there's a threat that state utility regulators could slap on rules that would keep SBC from recovering its investment.

SBC continues to promote the bills, even after the Federal Communications Commission issued a tentative ruling last month to deregulate broadband services.

Observers believe SBC and other telcos are pushing for the bills as a hedge against legal challenges to the FCC's ruling, which failed to deregulate key phone-competition strictures.

SBC is fending off stiff challengers in each of the states. The most vocal opponents are independent Internet-service providers, who say the bill could sound a death knell for their businesses.

SBC can't be trusted to set its own "reasonable" rates for access to unbundled portions of its network, the ISPs argued.

So far, the opposition has worked in Connecticut and Kansas. In those states, related bills failed to make it out of committee.

The next big fights will apparently occur in Indiana and Illinois. In the latter state, SBC wants relief from the Illinois Commerce Commission, a hard-core critic of Ameritech.

Indiana's "broadband parity" bill is moving through the legislature. But that state's Utility Regulatory Commission has also said it would review SBC's unbundled network element rates in light of the FCC decision.

The URC members pointedly said their agency, not the legislature, is the proper forum for setting rates and overseeing broadband services.