FCC OKS MEASURE TO PROMOTE MORE BROADBAND INVESTMENT

FCC commissioners this month approved orders designed to promote broadband investment by telecom carriers, wireless operators and power companies as the agency attempts to establish a foundation for intermodal competition between largely deregulated providers of packet-based networks.

It's a vision embraced by many leaders within the communications industry, including Comcast Chairman and CEO Brian Roberts, Verizon Communications Chairman and CEO Ivan Seidenberg and the United States Telecom Association (USTA).

During opening keynote presentations at USTA-sponsored Telecom '04 in Las Vegas, Roberts and Seidenberg said they have more similarities than differences in terms of policy. Both lead large companies wanting to invest in networks to compete in an economic environment driven by market-based realities instead of regulatory and legislative maneuverings.

“We do not seek to use regulation as a competitive sword in what should be marketplace battles, not political battles,” Roberts said. “We would rather focus our energies on finding ways to free us all — to remove the rules that are unnecessary or counterproductive and that keep the marketplace from working.”

Seidenberg agreed that network-based providers would benefit from a similar deregulatory playing field and vowed to push that agenda in Congress, which is expected to begin reconsidering the Telecommunications Act next year. Such a consensus among communications providers should enable Congress to complete the task within two years.

“I think one of the reasons it took so long last time is because we were fighting an internal civil war between the ILECs and the IXCs,” Seidenberg said during a press briefing. “So, if you were a regulator or legislator, you had absolutely no confidence that you knew which side of the argument to believe.”

USTA President and CEO Walter McCormick said policymakers can justify deregulation, noting that there is no dominant broadband provider and that customers generally have several platforms from which to choose, including wireline, cable, mobile wireless, fixed wireless and satellite offerings.

“Where consumers have a choice, government should get out of the way,” McCormick said.

To help ensure that consumers have many broadband alternatives, the FCC approved an order establishing rules for the deployment of broadband over power line (BPL). The ubiquity of the nation's power grid makes the technology particularly attractive to regulators, FCC Chairman Michael Powell said during the agency's last meeting Oct. 14.

Significant technological advances have transformed BPL from a curiosity to a viable broadband alternative, according to Precursor CEO Scott Cleland. A longtime critic of the BPL business case, Cleland said he is now “a believer” in BPL technology, which eventually will allow power companies to realize incremental broadband revenues for less than $200 per user.

Although the existence of the electric grid means “ninety-nine percent of what's needed is already built,” Cleland said it still will take some time before BPL represents a competitive third broadband wire worthy of deregulatory activity.

“That pipe into the home has to have footprints and fingerprints before the Bells get deregulation,” Cleland said. “And, by then, the Bells will have lost market share.”

ILECs should be helped in the short term by a series of recent deregulatory findings that have a negative impact on CLECs (see story, page 18). The FCC ruled that fiber-to-the-curb deployments — in which the fiber is within 500 feet of the premise — will be free of unbundling obligations, just like fiber-to-the-premise networks.

The FCC also acted to remove the primary barrier — spectrum availability — in the deployment of wireless broadband. With an auction of former NextWave Telecom licenses scheduled for January, the commission also approved an order to clear the Department of Defense from airwaves at 1.7 GHz. Those frequencies likely will not be auctioned until Congress passes a law that earmarks auction proceeds for military funding.

More evidence of the intermodal-competition view of the broadband industry could come soon. Without revealing details of the pending order regarding the Cingular Wireless/AT&T Wireless merger, Wireline Competition Bureau Chief Jeffrey Carlisle said regulators are looking beyond simply the competitive impact the deal will have on the wireless industry.

“At this point, it's kind of silly to talk about them in their own single, hermetically sealed [categories],” Carlisle said. “The historical dividing line between wireless and wireline today is less of brick wall and more of a fence.”

The overriding theme in this deregulatory trend is encouraging investments such as SBC Communications' commitment to spend $18 billion on fiber infrastructure during the next three years (see story, page 10). FCC Commissioner Kevin Martin says the FCC needs to establish rules clearly stating that, “as 21st century networks are built, they will not be regulated.”

The Bush Administration intends to create an environment in which “entrepreneurs can flourish,” said National Telecommunications and Information Association Assistant Secretary Michael Gallagher. Competitive questions can be addressed later, but building the broadband infrastructure is the priority right now, he said.

“Let's get the fiber in the ground first,” Gallagher said. “Let's get the services deployed and make sure we're maximizing all the broadband convergence.”

And FCC Commissioner Jonathan Adelstein noted that emerging technologies such as voice over IP (VoIP) do not change the need for policymakers to address questions regarding universal service and intercarrier compensation to provide the clarity needed for investment.

“We have to make sure that people are properly compensated for use of their networks,” Adelstein said. “Otherwise, there won't be any networks for VoIP to ride on.”