MESSAGE
| DATE | 2003-02-21 |
| FROM | Ruben I Safir
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| SUBJECT | Subject: [hangout] Re: [fairuse] More on the Networking Board Band isue
|
More on this from the Times
February 21, 2003 High-Speed Service May Cost More By SAUL HANSELL
Of the roughly 20 million users of high-speed Internet service, only a
few hundred thousand customers are likely to have their rates increased
as a direct result of yesterday's ruling by the Federal Communications
Commission. But some executives argue that eliminating this form of
price competition will lead to increased overall prices for the service,
also known as broadband.
The companies that will be hardest hit are those that have built
high-speed data networks that share the lines of local telephone
companies into homes and offices. The F.C.C. voted to eliminate, over
three years, a rule that forced local Bell companies to let these rivals
offer broadband services using their networks.
But even under the old rules, which had been intended to help them,
these companies have had a hard time competing, and most have failed.
The biggest company remaining in that market is Covad Communications,
which provides high-speed data service to 200,000 homes; its service is
sold to consumers mostly by Earthlink. Covad said that, with the ruling,
the price it paid local phone companies for access to their wires would
be $5 and $15 a month, up from the current rates of less than $5 or, in
some cases, free.
Currently, Covad charges Earthlink and other Internet service providers
about $30 a month, and Earthlink in turn charges consumers about $50 a
month. If the new rules are carried out, Covad said it would be forced
to raise its prices.
Phone companies use a technology called digital subscriber line, which
allows a voice phone call and high-speed data to use the same copper
wire at the same time, transmitting the data through inaudible high
frequencies. The previous F.C.C. rules forced local phone companies to
give access to these high frequencies to companies that were building
their own data networks but did not want to string new wires to
consumers' homes.
Michael K. Powell, the chairman of the F.C.C., argued yesterday that
phone companies should have been forced to continue to share their lines
for broadband service. He had taken the opposite point of view for voice
service, arguing the Bell companies should not be forced to share their
networks. He was outvoted on both counts.
"Line sharing has clear and measurable benefits for consumers," he said.
"The decision to kill off this element and replace it with a transition
of higher and higher wholesale prices will lead quite quickly to higher
retail prices for broadband consumers."
Internet service providers can also buy D.S.L. service directly from
local phone companies, without going through a company like Covad. Those
arrangements, which are subject to both state and federal regulations,
are not affected by the rule change yesterday. Indeed, most of the
D.S.L. lines offered by the two largest Internet services, America
Online and Microsoft's MSN, are purchased directly from local phone
companies.
But AOL, MSN, Earthlink and the other Internet service providers that
have dominated the dial-up market have collectively been a quite small
part of the broadband market, despite whatever price advantage the old
F.C.C. rules may have given them. The vast preponderance of broadband
customers choosing D.S.L. have purchased it directly from the local
phone company.
Even more customers, however, have chosen to get broadband service from
their local cable companies, which offer service that is often even
faster. At the end of June 2002, the F.C.C. counted 5.1 million D.S.L.
customers in the United States and 9.2 million broadband cable
customers.
Indeed, the phone companies have been struggling to increase their
market share against cable, largely by cutting their prices. SBC
Communications, for example, just lowered the price of its D.S.L.
service to $35 a month. It had been $50 a year ago.
The phone companies point to these price cuts as a sign that consumers
will not be hurt by the F.C.C. actions yesterday.
On 2003.02.21 19:42 Ruben Safir wrote: > > (from NY Fair Use
http://fairuse.nylxs.com ) > > > This article strongly calls into
question the NY Times ability to report > news on Digital Rights fairly.
> > > > February 21, 2003 > F.C.C. Leaves Most Rules on Network Leasing
in Place > By STEPHEN LABATON > > > > WASHINGTON, Feb. 20 — A deeply
divided Federal Communications Commission > today largely left in place
rules that are meant to foster local > telephone competition by
requiring the four regional Bell companies to > lease their local
networks to their rivals at low prices set by state > regulators. > >
But in a compromise order, the agency relieved the companies of their >
obligation to give rivals low-cost access to many of the crucial >
elements of the Bells' new high-speed Internet networks. > > The impact,
if any, on consumers may take months to become evident and > could vary
widely from state to state. Some experts predicted that the > changes
could lead to rate increases for consumers of high-speed > Internet
services offered by the telephone companies. > > The decision was a
stinging defeat for the agency's Republican chairman, > Michael K.
Powell, and a disappointment for the Bell companies. The > Bells have
been lobbying and litigating for years to scrap the rules and > had
hoped for a definitive repudiation of them in Washington's new >
deregulatory climate. > > In a partial dissent, Mr. Powell warned that
the ruling would sow > regulatory confusion, prompt a new wave of
litigation and do too little > to encourage investment in updating the
nation's telephone system. He > said the inconsistent approaches of the
states and the lawsuits that are > bound to challenge the new rules
"will take many years and will hardly > be the quieting and stabilizing
regime that was so craved by a rocky > market." > > But another
Republican commissioner, Kevin J. Martin, who brokered the > compromise
order by joining the agency's two Democrats on some aspects > of it and
sided with Mr. Powell and the F.C.C.'s other Republican on > other
details, said it was vital for consumers that the states continue > to
play a leading role. He said local regulators needed the flexibility >
to require the Bells to provide low-cost access to their networks to >
assure greater competition in many local markets. > > "We have crafted a
balanced package of regulations to revitalize the > industry by spurring
investment in next-generation broadband > infrastructure while also
maintaining access to the network elements > necessary for new entrants
to provide competitive services," Mr. Martin > said. > > By removing
restrictions on broadband — or high-speed Internet access — > but not on
traditional phone service, the decision was both a partial > victory and
a partial setback for the four regional Bell companies: > BellSouth,
Qwest, SBC and Verizon. Those companies' stocks all tumbled > yesterday.
> > Since 1996, the regional companies have been required to give small
> start-up rivals and large competitors like AT&T and WorldCom access to
> their local networks at low wholesale prices set by regulators to >
nurture the fledging competition in traditional local services. > > The
outcome was denounced by the Bells, which threatened a new round of >
lawsuits challenging the rules, just as they have in the past. Twice >
they have succeeded in court challenges, forcing the agency to rewrite >
the rules, only to be stymied by the F.C.C. They had hoped that the >
commission today would begin to do away with the wholesale pricing >
system altogether in favor of a system allowing them to negotiate higher
> rates directly with their rivals rather than have the lower rates >
imposed on them by utility regulators in the states. > > But in the
long-running legal, regulatory and political battle among the > various
sectors of the telephone industry, the decision today also > offered the
Bells some important gains. In a partial granting of their > wishes, the
commission ruled that they no longer needed to provide > rivals low-cost
access to crucial elements of the new high-speed > Internet networks
that the Bells have just started to build. > > That provision raised
concerns among some Internet access providers, > including Covad
Communications and its main marketer, EarthLink, and > prompted
predictions by some experts that the cost of high-speed > Internet
access services would rise for consumers. > > The outcome will now
largely be in the hands of state officials. In > recent months some
states, notably New York and Illinois, imposed cuts > that reduced some
consumer bills by 20 to 30 percent. > > Executives at the Bell companies
expressed bitter disappointment today. > > "This is a major setback for
the industry," said Thomas J. Tauke, a > senior vice president and top
lobbyist for the largest Bell company, > Verizon, and a former member of
Congress. "It's a major setback for > investment. It is a major setback
for consumers. It is a deterrent to > make the investments that would be
so important to the economy. The > F.C.C. simply blew it." > > William
M. Daley, a former commerce secretary in the Clinton > administration
who is now the president of SBC, called the decision "a > loss for
American consumers, telecom employees and advocates of real > reform." >
> But the ruling was praised by some of the rivals to the Bells. > > "We
applaud the F.C.C. commissioners who forged a bipartisan compromise > to
resolve contentious issues that have dogged this industry for more >
than half a decade," said James W. Cicconi, general counsel of AT&T, >
which has been actively trying to expand its local business in many >
states. "While the decision grants the incumbent monopolies far more >
deregulation than warranted, it also should permit AT&T and other >
carriers to continue to deliver competitive voice and broadband >
services." > > The F.C.C.'s move was also endorsed by some equipment
manufacturers, > including Intel, which are hoping it will encourage the
telephone > companies to increase their spending to try to improve their
networks. > > On Capitol Hill, the rules were criticized both by
prominent > Republicans, many of whom had supported the efforts by the
Bells for > more complete deregulation, and by Democrats, who opposed
the > deregulation of broadband services. > > "Market forces once again
have been shackled by political forces," said > Representative Billy
Tauzin, the Louisiana Republican who heads the > House Energy and
Commerce Committee. "This marks a low point for the > F.C.C." > >
Senator Ernest F. Hollings of South Carolina, the ranking Democrat on >
the Senate Commerce Committee, said the agency had "missed an important
> opportunity to speak with one voice and to provide the >
telecommunications industry with greater certainty." > > Though Mr.
Powell was the F.C.C. commissioner whom President Bush named > chairman
in 2001, the decision today was a sign of the emergence of Mr. > Martin,
a former official in the Bush White House, as an influential > deal
maker at the commission. He said the new set of regulations > "achieves
a principled, balanced approach." > > "It ensures that we have
competition and deregulation," Mr. Martin said. > "We deregulate
broadband, making it easier for companies to invest in > new equipment
and deploy the high-speed services that consumers desire. > We preserve
existing competition for local service — the competition > that has
enabled millions of consumers to benefit from lower telephone > rates.
And we continue the strong role of the states in promoting local >
competition and protecting consumers." > > But Mr. Powell, in a strongly
worded partial dissent, said that the > decision "could prove harmful to
consumers in the long run, and I cringe > to see their welfare raised on
the staff of the majority's decision." > > "What is remarkable about
today's decision is that one looks in vain to > find a clear or coherent
federal policy in the choices made by the > majority," Mr. Powell said.
His dissent is the first by a chairman on a > major F.C.C. regulation
since 1991. > > Trying to open local telephone markets to greater
competition, Congress > in 1996 adopted landmark telecommunications
legislation that required > the regional Bell companies to share their
equipment with competitors at > relatively low cost. > > The legislation
required the federal regulators to determine which > elements of the
Bells' networks were necessary for rivals to enter the > market feasibly
and to make those elements available on an individual > basis and at low
prices. > > Regulators ultimately decided to put every element of the
network on the > list under a rule formally known as the unbundled
network elements > platform. > > Last year a Federal appeals court, in a
victory for the Bells, > overturned the network rules, prompting today's
proceedings. > > But Mr. Powell and others said that today's decision
would shift the > unending and hugely expensive telephone wars back to
the states and the > courts. In fact, Mr. Powell's partial dissent
virtually invited > litigation, accusing the majority of flouting the
decision by the > appeals court and outlining those areas of the
proposal that he said > would not withstand legal scrutiny. Dismissing
the rules as > "Picasso-esque," he predicted that they would lead to
legal and > regulatory chaos. > > "The nation will now embark on 51
major state proceedings to evaluate > what elements will be unbundled
and made available to the competitive > local exchange carriers," Mr.
Powell wrote. > > "These decisions will be litigated through 51
different federal district > courts. These 51 cases will likely be
decided in multiple ways — some > upholding the state, some overturning
the state and little chance of > regulatory and legal harmony among them
at the end of the day." > > Industry executives, critics and supporters
of today's decision also > said that it would shift the battleground to
the states and the courts. > > "The one clear winner in all this is the
state public utility > commissions, and for everybody else it was a
mixed bag," said Royce J. > Holland, chairman and chief executive of
Allegiance Telecom, a > nationwide competitive telephone company based
in Dallas. "The second > biggest winner here was probably the American
Bar Association." > > > > -- > Ruben Safir > NYLXS
> > To stop the messages from coming see
http://www2.mrbrklyn.com/appl/fairuse/gone.html >
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