PC titans side with Bells on DSL

By Tim Greene
Network World, 12/14/98

Washington, D.C. - At the possible risk of crippling telephone competition, computer industry heavyweights are pressuring the government to ease telecom regulations so regional Bell operating companies can more quickly deploy high-speed services.

If adopted by the Federal Communications Commission, the proposal from vendors including Compaq, Intel, Microsoft and GTE could hurt start-up digital subscriber line (DSL) carriers that are in the midst of rollouts, critics say. The computer consortium is focusing on DSL services because the technology is a fast, inexpensive way to boost access speeds.

New carriers specializing in DSL say the proposal would give RBOCs an inordinate amount of control over the lines and hardware necessary to provide DSL services.

Under the proposal, RBOCs would not have to offer cut rates to bulk resellers of DSL services, thereby eliminating a whole class of alternative providers, critics say.

With the agreement, RBOCs would also gain the right to sell data services beyond local calling boundaries if that sale would significantly cut the cost of providing those data services.

And RBOCs would be able to sell data services through separate subsidiaries. Competitors worry the subsidiaries could get preferential treatment from the parent RBOC in the way of faster line provisioning and customer access.

Competitive local exchange carriers (CLEC) are also unhappy with the proposal because its provisions could block the easy access to secure facilities within carrier switching offices that CLECs say they need to provision DSL.

"Without the right protections, this is not a good idea, it is a wolf in sheep's clothing," says Michael Malaga, president of CLEC NorthPoint Communications, a DSL vendor.

The group generated the proposal in response to an FCC request made last summer for suggestions on whether it should let RBOCs sell long-distance data services. The proposal outlines 10 principles intended to give RBOCs more incentive to rollout DSL and other data services, according to Peter Pitch, a former FCC staffer who now directs Intel's telecommunications policy.

"We want competition to drive down prices, but we realize the RBOCs will be incredibly important to deployment," Pitch says.

CLECs want guarantees that RBOC subsidiaries that sell DSL services have to go through the same ordering process as CLECs, according to Chuck Haas, vice president of marketing for Covad Communications, another CLEC that specializes in DSL.

The FCC is scheduled to decide on the proposal next month. In a separate but related matter, the FCC issued a report last week stating that local phone competition has increased little since the Telecommunications Act of 1996 became law nearly three years ago (see graphic). The act mandates that the FCC draw up rules to encourage competition.

Fresh off its success in speeding the approval of a DSL standard (NW, Oct. 19, p. 8), the computer industry stalwarts may be out of their league here.

The network companies in the consortium were able to place their employees on the standards committee, but they cannot put their employees on the FCC.

For its part, the FCC has been gathering data since October on whether it should loosen restrictions on RBOCs, according to John Reister, director of product marketing for DSL hardware vendor Copper Mountain. Reister participated in roundtables on the issue that were run by the FCC, and the consortium is coming late to the table.

"This appears to be a public relations effort by the Bell companies to influence the FCC with consumer pressure at the eleventh hour," Reister says.

Ameritech was the only RBOC that failed to sign the proposal. It had already worked out a separate joint proposal with DSL service provider NorthPoint.