WASHINGTON, D.C. -- ISPs who have raised questions about the disparity in the way U.S. telecommunication and cable companies are regulated were handed a set back today when William Kennard, chairman of the Federal Communications Commission, spoke out against any further regulation.
Kennard said at a policy briefing on high-speed Internet access sponsored by the Forum on Technology & Innovation that the ultimate long-term solution is to let the market rule.
"We are faced with the problem of whether we are going to regulate up or not regulate at all and just hope for new competition," Kennard said. "It seems to me from where I sit it makes a lot of sense to try to promote as much competitive entry as we can ... so that we can get out of the business of regulation."
Kennard was one of four panelists assembled on Capital Hill to discuss control of what is known in the telecommunication industry as the last mile, or the wire linking American homes to the telephone network.
Cable television companies, which are subject to less regulation than telephone companies, are ahead in the race to sign up Americans for high-speed Internet access and that has become a serious issue for ISPs that are being blocked by some cable companies from offering their services.
Steve Case, chairman and CEO of AOL, has been especially vocal on the issue; he advocated a light touch regulation that would force cable companies to open up their systems. He said that the current regulations aren't fair.
A week ago, Case urged a U.S. Senate committee to support a light regulatory touch to address issues raised by convergence, such as the cable industry's practice of offering broadband Internet access exclusively through its own content services
"We are simply arguing there needs to be some kind of ... nondiscriminatory approach so that cable companies cannot block access to unaffiliated ISPs," Case said. "There are already laws on the books that do this. For example, CNN cannot block access to CNBC or Fox 2. They have to provide access. The same should be true here."
However Kennard said AOL and other ISPs might have to do what television programmers did in the 1970s and cut deals with the cable company owners and possibly even sell equity in their organizations in order to become part of the cable company's programming.
"Maybe it's not that unfeasible that [a cable company] may cut a similar deal with AOL," Kennard said. "That is a very real possibility."
Another panelist, Milo Medin, founder and chief technology officer of @Home Networks, said cable companies own 75% of his company, which works closely with the cable operators, providing second-tier customer support, backbone facilities and management services.
"When people ask for this light touch, it sounds a lot easier than it is to accomplish," Medin said. "This mutual exclusive [arrangement] that we have with the cable operators is designed to minimize risk in this kind of new environment for rolling the types of services out."
Case said Medin's argument was startlingly similar to arguments AT&T made 25 years ago to protect its monopoly and he added Medin's claim that investment would dry up if it appeared that regulations were about to be passed was ludicrous.
"I think there is no evidence to suggest that there is any lack of interest in funding anything related to the Internet," Case said.
Kennard also criticized Case's suggestion of light touch regulation as unrealistic and unproductive because it would stand in the way of the goal to get as many pipes into the arena as possible.
Cable and telecommunication companies are never going to be on a regulatory par, Kennard said, "unless you have a drastic rewrite of the Telecommunications Act of 1996, which I don't see on the horizon anytime soon."
RELATED LINKS
Network World Fusion, 2/25/99.
ISPs at odds with PC vendors on dereg proposal
FCC to vote on loosening RBOC rules to spur DSL rollouts. Network World Fusion, 1/22/99.
