Telcos Hit with Line-Sharing Order

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Washington -- Phone-company incumbents will have to split
voice services from data services when leasing facilities under a new Federal
Communications Commission order designed to lower the costs to firms offering competitive
digital-subscriber-line service.

The "line-sharing" rules, adopted Nov. 18, will
mean that consumers can buy voice service from their incumbent phone carriers and DSL
service from second providers without leasing second phone lines.

Competitive DSL providers will benefit because they need to
lease only that portion of a phone line dedicated to data traffic, rather than the entire
line, lowering their financial entry barriers.

The ruling is expected to help NorthPoint Communications
Inc., Covad Communications Group Inc. and Rhythms NetConnections Inc. -- DSL providers
that rely on phone lines to reach consumers with high-speed links to the Internet.

"Line sharing will get advanced services, like
high-speed Internet access, into the home quickly, efficiently and as inexpensively as
possible," FCC chairman William Kennard said.

Roy Neel, president of the United States Telecom
Association, which represents local-exchange carriers, denounced the ruling as
inconsistent with the Telecommunications Act of 1996. That law generally requires phone
incumbents to share their facilities with new entrants.

"By this decision, the commission draws close to the
line of the nationalization of [local phone] networks," Neel said, adding that the
FCC gave regulatory advantage to cable companies, which don't have to lease their data
facilities to third parties.

Jonathan Akin, a telecommunications analyst with Ferris,
Baker Watts Inc., said in a research report that the FCC rules won't have much impact
until the middle of next year because state regulators will need time to decide the prices
that phone companies may charge for the data portion of the loop.

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