Broadband rulings draw user concerns

* Users react to FCC, Supreme Court decisions

Recent broadband rulings by the U.S. Supreme Court and the FCC could pinch corporate networks that link remote workers to corporate VPNs via DSL or cable modem by making connectivity more expensive, or requiring a change in service provider or underlying access technology.

"We are quite opposed to this direction," says Jay Shell, vice president of committees at the Enterprise Networking Technologies User Association and a member of the technical staff at Flagstar Bank, in Troy, Mich. "A lot of companies use these types of services to support mobile workers and virtual offices. There may not only be fewer choices, but the cost of these services is likely going up."

Bill Moore, telecommunications manager at the Museum of Modern Art in New York, says, "It was not a decision I was happy to see. The first thing that occurred to me when I heard the news was that our bills will be going up."

Rulings by the FCC and the Supreme Court that DSL and cable modem services are exempt from telecommunications regulation could boot some ISPs off these facilities or raise their access fees significantly. But the rulings might also prompt service providers to explore last-mile bypass alternatives, such as wireless and broadband over power line (BPL), to serve their Internet access customers.

The decisions also might drive more ISP wholesale business toward alternative, facilities-based DSL providers such as Covad, which could entice migration through attractive pricing or packaging incentives.

One large ISP that might feel the pinch is EarthLink, which provides DSL service to 1.5 million customers over local exchange carrier loops and cable TV facilities. In a statement following the FCC's Aug. 5 decision, EarthLink said it is "confident that we will extend our existing commercial agreements with the Bells so that we can continue to deliver DSL services."

The ISP also said it will continue to work with its cable partners and explore next-generation broadband to give consumers competitive alternatives to high-speed Internet service. EarthLink said it will work with the FCC to offer consumers "an expanding line of competitive advanced communications services and applications as the FCC phases out the regulatory framework now governing DSL service."

"We were pursuing wireless and alternative broadband initiatives even before the [Supreme Court] decision or the recent decision of the FCC," an EarthLink spokesman said last week when asked to elaborate on the Aug. 5 statement.

He stopped short of saying that EarthLink will accelerate investments in wireless or alternatives, including BPL. EarthLink also offers satellite Internet access.

"We're pursuing those initiatives that make economic sense," the spokesman said. "They're all great opportunities for us."

One initiative includes a market trial with Covad for bundled voice and data services. The trial, designed to provide "an affordable alternative" to the local phone companies for voice and broadband Internet access, will begin in October in four markets: Dallas, San Francisco, San Jose and Seattle.

Covad is a nationwide provider of wholesale and retail DSL and voice services, including VoIP, that could benefit from the FCC ruling.

"It's pretty obvious that Covad is the only national broadband provider out there, and we are going to continue to provide access to [ISPs]," says Susan Jin Davis, Covad vice president for government and external affairs. "I think it would make us more attractive."

Noting the upcoming trial with EarthLink, Davis says Covad is upgrading its DSL access multiplexers to support video. This would enable Covad to offer ISPs a "triple-play" bundle of voice, data and video with which to compete against incumbent local exchange carriers and cable companies.

Despite the specter of higher prices and less choice, one user believes the rulings might translate into better broadband service quality.

"The main issue we're looking forward to is being able to get DSL service with guaranteed class of service," says Davidson Scott, director of architecture and infrastructure Michael Baker Corp., at engineering services firm in Moon Township, Pa. "I'm not saying I'm looking forward to paying more for DSL, but I am looking forward to getting a service with guaranteed performance. We have deployed VoIP over a standard DSL service with mixed success, but in the end you can't [currently] guarantee performance."

The Museum of Modern Art's Moore, however, cites concerns that smaller ISPs, especially those in rural areas, might be forced out of business if they must pay higher access fees to the incumbents. One analyst concurs but notes that the telecom economy over the past five years has had a greater effect on their demise.

"If you're a pure passive-overlay player - a small ISP who doesn't have any infrastructure - you're probably dead," says Thomas Nolle, president of consultancy CIMI Corp. "But anybody who thought these guys weren't dead after the bubble period was probably delusional."

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Copyright © 2005 IDG Communications, Inc.

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