Posted on 02/26/2003 10:45:59 PM PST by HAL9000
WASHINGTON, Feb 26 (Reuters) - Dominant U.S. local telephone companies such as BellSouth Corp. will likely invest further in high-speed networks despite a decision that they must continue to share their networks with rivals, Federal Communications Chairman Michael Powell said on Wednesday.The FCC voted to keep rules that require the carriers to give rivals discounted access to their voice networks but lifted sharing requirements on fiber-optic networks in hopes of spurring further investment in high-speed networks and video-on-demand.
Powell, who had favored reducing sharing requirements on most voice and data services offered by the carriers but was outvoted by the two Democrats on the FCC and Republican FCC Commissioner Kevin Martin, also voiced anger at the decision.
The dominant carriers had lobbied for lifting rules on high-speed Internet services before they would begin investing in their networks again. But even with the FCC ruling, SBC Communications Inc. gave a warning on Tuesday that it may cut spending and BellSouth has said it would need to see a pickup in demand before it would spend more.
"I think it's a lot of crying, a lot of cry-baby reactions to a business decision at the end of the day," Powell told the U.S. House Energy and Commerce subcommittee on telecommunications which was holding a hearing on the state of the industry.
"I still don't think when they go back in the board room and they look at their fiduciary responsibility to shareholders, they won't be able to ignore completely the opportunity that this decision provides," he said.
"There obviously was hope that broadband investment would follow the decision," Martin said.
The FCC ruling will likely be appealed to the courts by carriers on all sides which could bring more years of uncertainty to the already ailing telecommunications industry, a sector that has been hammered over the last two years by stiff competition, overcapacity and a soft economy.
Lawmakers on the panel seized on that point to criticize Martin for his vote with the Democrats, arguing that the decision would turn over the process to 51 state commissions to decide if and when to lift sharing requirements on the dominant carriers.
"You instead turned this whole decision process to 51 regulatory-minded state commissions," said Rep. Billy Tauzin, chairman of the full House Energy and Commerce Committee and a Louisiana Republican.
A federal appeals court last year questioned the FCC's rules that required the Bells to share their networks and struck down another rule that forced them to allow customers to have different providers for voice and high-speed Internet service.
There were hundreds of switches owned by rival local telephone service providers like AT&T Corp. and WorldCom Inc. that could be used instead of using the Bells' networks, Tauzin said.
"I think it was important for us to set up a national framework and I think it was also important for us to take into account the D.C. Circuit's decision that we needed to put forth a framework that would allow for greater granularity and distinguish between the customers who were overpaying and therefore subsidizing and those who weren't," Martin replied.
The FCC split angered most sides and sent several telephone companies' shares down sharply.
"Although we made noble strides in the area of broadband infrastructure deployment, the commission chose a course in some of its decisions that will cause further unrest for the industry with the ultimate loser being the American public," Powell said.
On this, we agree.
"You instead turned this whole decision process to 51 regulatory-minded state commissions," said Rep. Billy Tauzin, chairman of the full House Energy and Commerce Committee and a Louisiana Republican.
I'd rather have "51 regulatory-minded state commissions" in charge of their local utilities, rather than one big regulatory-minded federal commission. This committee needs a new chairman who understands and favors states rights - preferrably one who is not on the RBOC payroll. What was the GOP thinking when they let this ex-Democrat have the chairmanship?
No way is this going to stand.
I think it could stand. Those old copper wireline networks were vestiges of the monopoly era where the AT&T had an exclusive franchise from the government - then the Baby Bells were given those networks in the Bell breakup. The new fiber networks will not be developed in the same way, so the argument for competitive access on new fiber networks is less compelling. We shall see.
The FCC ruled that the Bells must seek state approval before turning off an existing copper network when switching to fiber - and I suspect some states will require the Bells to sell those copper networks rather than just shutting them down. This would allow consumers a choice between the new fiber networks and the old copper networks that may still have some usefulness.
By the same rules, AT&T and other companies could build new fiber networks and not allow the Bells to access them. That is a good incentive for competitors to build out.
Yes, the FCC left a big "loophole" for hybrid networks to exclude competition as an incentive for the Bells to upgrade their infrastructure. (Get it - "loophole"???)
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