FCC loosens Bell reins

Feds hope move will spark massive broadband deployment.

By David Rohde
Network World Fusion, 8/7/98

The Federal Communications Commission on Thursday proposed a partial deregulation of Bell companies' data services in hopes of getting them to speed up deployment of digital access lines.

[Kennard pic] As expected, the FCC offered regional Bell operating companies the option of setting up "advanced-network subsidiaries" for the provision of digital subscriber lines (DSL) and other high-speed data-transport technologies.

Under the proposal, RBOCs would be able to move equipment such as DSL Access Multiplexers (DSLAM) and other high-speed electronics into the subsidiary. This subsidiary would not be regulated like other RBOC business units, which generally must offer ports on its switches and other network gear to competitors. The DSLAMs would not have to be offered to competitors, and the subsidiary would not have to offer DSL lines with a wholesale discount to resellers.

Four of the five RBOCs - all but BellSouth - had petitioned the FCC for this kind of move under Section 706 of the Telecommunications Act of 1996. Section 706 obligates the FCC to begin knocking down regulatory barriers to broadband deployment within 30 months of the telecom act's enactment - a deadline that fell due this week. The RBOCs had complained that imposing resale and interconnection requirements on DSL and other new services discouraged them from rolling them out broadly.

But the FCC also piled numerous qualifications and exceptions into its proposal, most based on lobbying from long-distance carriers and competitive local exchange carriers (CLEC):

The RBOCs would still have to offer copper loops - the "last mile" to the home or business - at a wholesale discount to competitors.
Although competitors could no longer gain access to the RBOCs' DSLAMs, they would still be allowed to install their own DSLAMs and other line-termination equipment in the RBOCs' central offices.
The advanced-network subsidiary would not be allowed to carry voice traffic, answering objections from long-distance carriers that RBOCs could use the subsidiaries as a back-door way to avoid existing tight regulation on so-called "plain old telephone service."
All bets would be off if the RBOC does not choose the separate subsidiary - DSL and other advanced services would still be subject to all of the FCC's resale and interconnection rules with competitors.

FCC Chairman William Kennard promised to turn the proposal into a final rule by February 1999 - a quick turnaround by FCC standards. "We should have a sense of urgency about this," he said. Pleading with carrier lobbyists not to nit-pick the proposal to death, Kennard added: "What the American consumer wants is more bandwidth from multiple providers. We really don't care who gets there first."

Unfortunately for Kennard, the nit-picking began almost immediately after the proposal was issued Thursday morning. "This action falls far short of the giant leap required to deploy advanced telecommunications services to all Americans," said Tom Tauke, senior vice president for government relations at Bell Atlantic. None of the five RBOCs immediately said they would take up the advanced-network subsidiary option if passed into law. Several complained that the exceptions and qualifications added administration burdens and extra costs.

For their part, long-distance carriers said the proposal went too far because it would be difficult to police the separate subsidiary to make sure it doesn't favor the parent company when it comes to collocating DSLAMs and other equipment.

"The phrase 'separate affiliate' is an oxymoron," said Jonathan Sallet, chief policy counsel in MCI's Washington, D.C. lobbying office. "It's like paying yourself to park in your own garage."