FCC Fiber Decision for the Bells

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FCC Fiber Decision for the Bells

I was watching the news last night when the news anchor stated that an FCC ruling came down that the FCC had granted the regional Bell companies relief from having to lease their fiber networks to competitors at regulated rates. I was stunned considering how supportive FCC chairman Michael Powell has been in the past with regards to competition. He’s especially been a friend and proponent of competition in the VoIP industry, so this decision came as a surprise to me. It smelled to me like some serious Baby Bell lobbying paid off.

FCC Chairman Michael Powell says this means “the digital migration is one step further along as more investment flows into the deployment of these advanced networks.”
The Bell companies say the federal rules provide an incentive to build fiber to the home and upgrade their networks extending to businesses. The Bell companes have long complained that they have no incentive to invest in new technology if they are required to lease their voice and data networks to competitors at a discounted rate with little profit or even at a loss.

I’m not so sure I agree with that statement. Giving the Bell companies a monopoly on the “last mile” fiber is not going to spur the Bell companies to deploy fiber any faster. Competition is what drives the market not monopolies! The counter argument to this might be “Well, the drug companies are issued patents to protect their investments in developing and researching new drugs, so why shouldn’t the Bell companies be similarly protected for spending billions on deploying fiber to the home?” On the surface, that’s a good point if you think about it. But this FCC decision sounds so final. At least drug patents expire in 10 years or so. Maybe the FCC should have said the Bell companies get a 5-10 year "headstart" before they must lease their fiber lines. That seems much fairer than the decision handed down.

Commissioner Michael Copps released a dissenting statement, “Though today’s Order speaks in glowing terms about broadband relief, the reality is far less radiant. I don’t believe competitive telecommunications have been faring very well under our watch and this particular proceeding strikes me as yet another in a series of prescriptions this Commission is willing to write to end competitive access to last mile facilities. It seems every month brings a new onslaught."

Rich Tehrani also wrote about this here: Is the FCC Stifling Competion?

Here’s the FCC announcement (which you can also read here:
The Federal Communications Commission (FCC) today took further steps to encourage deployment of fiber optic broadband networks capable of delivering advanced data, video and voice service to the mass market by incumbent local telephone companies.

The FCC’s action is consistent with rules first adopted in 2003, and upheld by the U.S. Court of Appeals for the D.C. Circuit, that relieved incumbent local telephone companies of most obligations to lease advanced fiber-to-the-home (FTTH) network facilities to competitors at a
regulated, cost-based price. The FCC found that those obligations discouraged incumbent carriers’ investment in FTTH broadband facilities.

Today’s action builds on those broadband principles, and relieves incumbents from unbundling requirements for fiber-to-the-curb (FTTC) loops, where fiber is extended within 500 feet of a customer’s premises. The FCC found that FTTC networks can deliver many of the same benefits as FTTC loops. FTTC networks offer enhanced capability for providing advanced services, including the ability to offer voice, multi-channel video, and high-speed data services.

The new rules free companies to choose between FTTH or FTTC networks based on marketplace characteristics, rather than disparate regulatory treatment.

The FCC also clarified that incumbent LECs are not obligated to build time division
multiplexing (TDM) capability into new packet-based networks or into existing packet-based
networks that never had TDM capability.

The FCC’s order addresses October 2003 petitions filed by BellSouth Corp. and SureWest
Communications. The petition asked the FCC to reconsider portions of its 2003 Triennial Review
Order governing the incumbents’ obligations to unbundled elements of their networks. Action by the Commission, October 14, 2004, by Order on Reconsideration (FCC 04-248).

Chairman Powell, Commissioners Abernathy and Martin, with Commissioner Copps dissenting
and Commissioner Adelstein concurring in part, dissenting in part. Separate statements issued by
Chairman Powell, Commissioners Abernathy, Copps, Martin, and Adelstein.

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