A 2005 focal point

Technological advancements in labs are made independent of regulation, but industry regulation — or lack thereof — often dictates which technologies reach the marketplace and gain traction with consumers. With this in mind, resolving regulatory issues promises to be a communications-industry priority during the next year.

Sweeping regulatory changes appear to be on the horizon, as the FCC, Congress and the court systems try to grapple with the development of Internet protocol (IP)-based services delivered over a variety of broadband infrastructures. One-time monopoly utilities such as telephone companies and cable operators — even electric companies — are primed to use broadband to tread on each other's traditional turfs, where they also are being challenged by wireless and satellite technologies.

Such convergence is not easily handled under the laws of the 1996 Telecom Act, whose authors established categories such as heavily regulated “telecommunications services” and lightly regulated “information services” with no idea that IP data would make those distinctions largely irrelevant.

Congress will likely revisit the Telecom Act in 2005. Verizon CEO Ivan Seidenberg and Comcast CEO Brian Roberts last month vowed to present a common message to lawmakers that would protect investments by broadband network providers. Seidenberg predicted such consensus would allow Congress to adopt new legislation in under two years.

But many who watched Congress wrestle with the 1996 legislation for the better part of a decade believe such a timetable is unrealistic. New technologies such as WiMAX, voice over IP (VoIP) and broadband over power line — the primary catalyst of legislative initiatives — offer tremendous potential, but critics argue that none of them are mature market forces worthy of being deemed legitimate intermodal competition to regulated legacy systems.

While RBOCs clamor for deregulation, many rural ILECs fear such a change could result in the collapse of universal service support and access charges — revenue streams critical to their profitability. Meanwhile, any political alliances RBOCs have with intermodal competitors could falter because cable operators and independent VoIP providers benefit greatly from the status quo.

Absent Congressional action, the FCC appears willing to tackle these issues on its own, although commissioners have publicly acknowledged the constraints of the 1996 Telecom Act. With intramodal competition largely undermined by a court decision that unraveled most ILEC unbundling obligations, the current commission appears prepared to base many upcoming policy decisions on the idea that intermodal competition exists between various broadband network providers.

A decision to assert jurisdiction over VoIP is expected this month, while FCC officials hope the complex intercarrier-compensation debate can be resolved by mid-2005. Meanwhile, questions about the universal service fund — the focus of a funding shortfall amid fraud allegations — remain.

Most observers agree that FCC rulings on these matters will be challenged in court. And of course, all policies will be affected by last week's elections, which promise to result in significant changes at the FCC and in Congress, which already will be without two traditional leaders on telecom issues, Rep. Billy Tauzin (R-La.) and Sen. Ernest Hollings (D-S.C.).

FCC's expected to-do list