SBC Communications Inc. is urging federal regulators to remove rules that the Baby Bell said hamper its ability to deploy high-speed Internet service, claiming those regulations give cable operators a competitive advantage.
Meanwhile, the cable industry claimed that market forces have spurred telephone and cable companies to make broadband services available to millions of consumers, thus demonstrating that it's not necessary to change regulatory schemes.
In a Sept. 24 Federal Communications Commission filing, SBC said cable would maintain its broadband advantage with respect to homes passed and subscribers served unless burdensome regulations on phone companies are lifted.
"Despite clear evidence that [digital subscriber line service] is trailing far behind cable, telephone companies are regulated to the hilt, while other service providers — the dominant cable providers, in particular — are left alone," SBC said.
Except for AOL Time Warner Inc. — which must furnish unaffiliated Internet-service providers with access to its cable systems under terms of a 2000 merger approval — cable operators face little in the way of broadband regulation. By contrast, phone companies must share their facilities with competitors and provide consumers with the Internet-service provider of their choice.
SBC said the FCC has two choices: It can either make the cable industry look more like the phone industry or make the phone industry look more like the cable industry.
"The most logical framework is the latter," the telco said in the 15-page filing.
According to industry data, cable operators have signed up 5.5 million broadband subscribers, while telco-provided DSL services have signed up 3 million. SBC serves about 1 million DSL subscribers.
In a June report, investment firm Morgan Stanley Dean Witter & Co. said cable-modem service was available to 66.1 million U.S. homes as of June 30, while DSL reached 37.5 million homes as December 2000.
By the end of 2000, Morgan Stanley projected, cable's high-speed service would reach 95.1 million homes and DSL would reach 63.6 million households.
Though SBC claimed the data show that cable has a large and growing advantage, the cable industry told the FCC broadband deployment and subscriber data provide evidence of robust competition requiring no regulatory tinkering.
"The competitiveness of this marketplace is not open to question," the National Cable & Telecommunications Association told the FCC in a Sept. 24 filing.
AT&T Corp., which provides broadband services to 1.3 million cable-modem subscribers, said the DSL market would have grown more quickly had many non-Bell DSL providers not gone bankrupt. AT&T attributed those failures to the Baby Bells' refusal to abide by network-sharing rules mandated under the Telecommunications Act of 1996.
"If these failed competitors did make one common mistake in their business plans, it was relying on the promise of the 1996 act that they would have a fair chance to compete with the established incumbents," AT&T said in a separate FCC filing.