FCC May Set Rules Allowing Bells Exclusive Access Over DSL Lines
By AMY SCHATZ
Staff Reporter of THE WALL STREET JOURNAL
August 3, 2005; Page A4
http://online.wsj.com/article/0,,SB112302782272403253,00.html?mod=home%5Fwhats%5Fnews%5Fus
The Federal Communications Commission could change the rules regulating
phone companies' Internet services as early as tomorrow, making it more
difficult for independent Internet providers to offer high-speed service
but offering an incentive for the Bells to build out broadband networks.
Details still are being hammered out and it is unclear whether the new FCC
chairman, Kevin Martin, has enough support to approve the change. The
matter wasn't on the FCC's formal agenda for tomorrow's meeting but is
expected to be a last-minute addition, people close to the issue say.
Separately, FCC commissioners are finishing up a review of Sprint Corp.'s
$35 billion acquisition of Nextel Communications Inc. and a vote could come
as soon as today, FCC officials said. Last month commission staff
recommended approving the acquisition. The Justice Department also must
approve the deal.
At tomorrow's meeting, the four-member FCC, split evenly between
Republicans and Democrats, could vote on changing how a phone company
Internet connection -- known as digital subscriber line, or DSL, service --
is regulated, making the rules similar to those imposed on cable-television
Internet services.
Under the change, phone companies no longer would be subject to common
carrier regulations on their Internet lines, including rules that require
them to lease capacity to competitors.
The change stems from a Supreme Court decision in June upholding the FCC's
authority to regulate cable Internet services. The FCC applied a standard
giving cable companies exclusive access over their broadband Internet lines
and the ability to exclude competitors. Phone companies argued that they
would be at a competitive disadvantage if the FCC didn't change the rules
for them, too.
"Where cable is very competitive is on high-speed Internet. They got a head
start and we have regulation and they don't. We're hopeful Chairman Martin
will be able to rectify that," said Richard Notebaert, Qwest Communications
International Inc. chairman and chief executive.
Mr. Martin said last month that he planned to move quickly to provide
relief for the Bells, but it wasn't clear until this week that he would try
to do it this fast.
The change, which likely would take effect this fall, would allow phone
companies to kick competitors such as EarthLink Inc. and America Online, a
division of Time Warner Inc., off their DSL systems. If independent
Internet providers can't reach terms with phone or cable companies, they
could be forced to either focus on providing dial-up Internet service or
emerging technologies such as high-speed wireless Internet.
The commission must resolve several issues, including concerns about how
the change might impact the Universal Service Fund, which subsidizes phone
and Internet services in rural areas. DSL customers pay a USF fee, unlike
cable Internet users.
Lobbyists for Google Inc., Yahoo Inc. and Microsoft Corp. also are pressing
for "Internet neutrality" protections to be included in the rule. There is
concern the change will give cable and phone companies unprecedented
control over Internet access, allowing them to prevent consumers from
reaching some Internet sites or attaching competitors' gadgets to Internet
connections. Cable and phone companies argue that network discrimination
hasn't been a problem and consumer complaints would quickly quash any such
efforts.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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