RBOC enemies hustle to block FCC data deregulation move

By David Rohde
Network World Fusion, 8/5/98

Long-distance carriers and competitive local carriers are engaging in a last-minute lobbying frenzy to stop the Federal Communications Commission from essentially deregulating the Bell companies' data services.

The FCC Thursday is expected to rule on petitions from four of the five regional Bell operating companies to enable them to offer regionwide IP and other data services along with unregulated broadband access loops such as digital subscriber lines (DSL).

The RBOCs' petitions ask the FCC to allow the companies to carry data traffic beyond their usual local calling boundaries, even before they win general long-distance authority. The RBOCs' petitions also ask for permission not to have to resell their data services to competitors at a discount.

The FCC is considered certain to vote favorably on the petitions because Chairman William Kennard has all but endorsed them in several recent speeches. Right now the goal of the petitions' opponents is to make sure the FCC only votes out a deregulation proposal rather than an "interim order" - a legal move that would end RBOC data regulation subject to further review. A proposal - more formally, a "notice of proposed rulemaking" in FCC-speak - would require a comment period before the Bells could wriggle free of restrictions.

Up until as late as Tuesday the FCC was apparently considering telling the RBOCs they could immediately offer deregulated data services so long as they set up a separate subsidiary to do so. "I think [Kennard] wanted to do the interim order," said a source close to the situation. "I think he's being talked out of it by threats of going straight to court."

The lobbying activity centers around a portion of the Telecommunications Act of 1996 known as Section 706, which was almost ignored until this year. Section 706 requires the FCC to come up with a plan to eliminate regulations blocking the deployment of broadband data services. The congressional deadline for the FCC plan is 30 months after the telecom act's enactment. That deadline is this Saturday.

All of the RBOCs except BellSouth have interpreted Section 706 to mean that their voice and data services should be treated differently. They claim in their petitions that having to resell xDSL lines and other broadband IP access technologies to competitors at a wholesale discount discourages them from rolling them out at all. (BellSouth has pursued a different tack, continuing to file comprehensive long-distance petitions at the FCC for various states in its territory. But legal experts believe a favorable FCC ruling on Section 706 would apply equally to all five Bells.)

Much of the opponents' last-minute lobbying is centering around debunking the Bells' claim that they can't deploy DSL and other advanced services until they win Section 706 authority. Late last month lawyers for WorldCom went to the FCC and dumped an 86-page stack of printouts from the Bells' Web pages extolling their already-announced DSL plans. "The point is that the [RBOCs] already are busily deploying ADSL services across the country," said Richard Whitt, WorldCom's director of federal affairs. "Current deployment incentives obviously are more than sufficient."

The long-distance carriers also are trying to convince the FCC that the distinction between voice and data services is phony. In a briefing for reporters Tuesday, two top MCI officials - chief policy counsel Jonathan Sallet and chief engineering officer Fred Briggs - labeled the Section 706 petitions a grab for a "digital monopoly." They said that once RBOCs set up separate IP networks without restrictions on calling areas or resale, they could run all types of traffic, including voice, over them.