REGULATORY: The 10 Most Important Regulatory Events of 2003
The FCC’s Triennial Review order: The UNE-P portion kept the unbundled network platform in play and non-facilities based competitive carriers alive--for the moment. State commissions must complete their market-by-market analyses by July 2004. The broadband portion granted incumbent carriers the regulatory relief they had been seeking through the controversial legislation sponsored by Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.). It effectively freezes competitive carriers out of the broadband future.
The Adelstein factor: When Jonathan Adelstein became an FCC commissioner in December 2002, filling the vacancy created when Gloria Tristani resigned in September 2001, it was just in the nick of time from Commissioner Kevin Martin’s perspective. Adelstein gave Martin the opening he needed to outmaneuver Chairman Michael Powell on the Triennial Review. Without him, Martin would have had to convince Commissioner Kathleen Abernathy to support his position on UNE-P, something that wasn’t going to happen. With Adelstein, along with fellow Democrat Michael Copps, Martin had the votes needed to push forward his agenda.
Martin outfoxes Powell: Conventional wisdom said FCC Chairman Michael Powell’s deregulation of the local market via the Triennial Review was a fait accompli. Martin had other ideas, and in the process became the patron saint of competitive carriers. The entrance of Adelstein into the drama was the catalyst, but it was Martin’s fearlessness and conviction that delivered the goods.
The FCC decides to review TELRIC: It’s about time. Even if you believe there is nothing wrong with the formula, telecom is a far different place than it was seven years ago when the Reed Hundt-chaired commission created the formula. The FCC has tentatively concluded that the formula should contemplate the actual, rather than hypothetical, forward-looking costs of operating a network.
The 9th Circuit’s ruling on cable modem service: The U.S. Court of Appeals for the 9th Circuit sided with Internet service providers and declared that the FCC erred when it defined cable modem service as an information service rather than as a telecommunications service. However, the court stopped short of telling the FCC it must regulate such services. So while the FCC could force cable companies to open their networks as a result of the ruling, it probably won’t. Instead the commission will use its forbearance authority to declare cable modem services as telecommunications services, but decline to regulate them. Nevertheless, this was a startling win for ISPs.
SBC’s end run in Illinois: The Bell company, frustrated by the Illinois Commerce Commission, decided it would be faster and more effective to go to the Illinois General Assembly for wholesale rate relief. The bill was signed into law just four days after its introduction. SBC took a PR hit, partly for the end run and partly due to the perception that SBC President William Daley used his considerable clout to push the bill through: His brother is the powerful Chicago Mayor Richard Daley.
The federal appeals SBC court ruling: The U.S. Court of Appeals for the 7th Circuit upheld a permanent injunction preventing enforcement of the Illinois wholesale rate hike law. It did so because the Illinois legislature addressed just two of the multiple factors that must be considered when setting wholesale rates. But the court also ruled that while state legislatures cannot set rates, they can be involved in rate setting, clearing the path for similar laws in other states.
Federal court says no to VoIP regulation: The Minnesota Public Utility Commission tried to force VoIP provider Vonage to register as a telecommunications carrier before offering local voice service in the state. Such a designation could have subjected Vonage to certain common carrier obligations. A federal district court agreed with Vonage that VoIP is not a telecom service but an application that rides over the Internet, which according to the Telecom Act must remain unregulated.
Federal court removes final LNP hurdle: The wireless industry, led by the Cellular Telecommunications & Internet Association, exhausted nearly every option to prevent the FCC’s local number portability mandate from taking effect last month. When the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FCC had the legal right to set and enforce the mandate, the battle, for all practical purposes, was over.
The USTA Plan: The U.S. Telecom Association hatched a plan to lobby federal lawmakers for additional regulatory relief and universal service reform. A key element of the plan was the solicitation of 13 of telecom’s largest and most influential vendors, each of which was asked to contribute $500,000 annually for the next three years to support the effort. Competitive carriers immediately accused the Bell companies of using their market power to coerce vendors into joining a cartel whose aim is to finish them off once and for all. They asked the House Judiciary Committee to investigate the possible antitrust implications of the plan. The plan was viewed as another Bell end run around regulators, this time on the federal level, with some justification: SBC President William Daley hosted the dinner where USTA President & CEO Walter McCormick presented the plan to the vendors.
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