FCC Liberates Bells’ DSL


The Baby Bells won a big victory at the Federal Communications Commission Friday, as the agency voted to deregulate their high-speed-data services in an effort to create regulatory parity with market-leading cable companies.

FCC chairman Kevin Martin pushed for Baby Bell deregulation after the Supreme Court ruled in late June that the commission had the authority to shield cable-modem service from a range of regulatory obligations, including providing network access to competing Internet-service providers such as America Online Inc. and EarthLink Inc.

“The order today is a momentous one,” Martin said, adding that “leveling the playing field” between the Bells and cable was one of his key goals.

In a 4-0 vote, the FCC held that the Bells’ digital-subscriber-line service is, like cable-modem service, an information service. Previously, DSL had been classified as a telecommunications service, which is a heavily regulated category in federal communications statutes.

As a result, the Bells will not have to share their networks with ISPs. The FCC also said it plans to phase out the need for the Bells to contribute a portion of DSL revenue to universal service -- the program that subsidizes phone service in rural areas where high costs can make dial-tone service unaffordable.

National Cable & Telecommunications Association CEO Kyle McSlarrow expressed his support by saying, “We applaud chairman Martin for making broadband deployment a national priority and support today's FCC decision to promote deregulatory policies that treat like services alike.”

He continued, “We invite the telephone companies to take a similar approach to regulation of video services and drop their self-serving demands for special treatment by the government when entering the video marketplace. A competitive marketplace with a level regulatory playing field for all services, regardless of technology, is one that all industries should be prepared to compete in.”

Susanne Guyer, senior vice president for federal regulatory affairs at Verizon Communications Inc., also applauded the FCC’s action.

“This is an important step toward a national broadband policy that allows consumers to enjoy the full benefits of competition,” she said. “At last, regulations are catching up to where consumers and technology have been for some time.”

The Consumers Union and the Consumer Federation of America blasted the FCC, saying that the ruling would lead to higher broadband-access prices and result in consumers losing access to Internet content blocked by network owners.

The ISP-access rules go away in one year, giving the companies time to adjust to the new deregulatory environment. Universal-service payments cease in 270 days, but the FCC reserved the right to extend the deadline while it finds substitute subsidy funding, which might include contributions from cable.

Martin, who became chairman in March, worked hard to gain the support of FCC Democrats Michael Copps and Jonathan Adelstein. While both Democrats said reclassification of DSL was not their preferred course, such a step was inevitable in the wake of the Supreme Court’s 6-3 ruling in the Brand X case.

“The Supreme Court has fundamentally changed the legal landscape with its Brand X decision,” Copps said.

The FCC also released a notice of proposed rulemaking on possible consumer-protection rules it could impose on cable operators’ and phone companies’ high-speed-data services. The agency did not indicate how quickly it would decide issues raised in the proposed rulemaking.

In another decision, the FCC released a policy statement stating, among other things, that consumers are “entitled to access the lawful Internet content of their choice.”

While nonbinding, the statement indicated the commission’s support of network neutrality -- the idea that cable and phone companies can’t discriminate against content rivals.