FCC leaning toward deregulated broadband

The U.S. Federal Communications Commission (FCC) last week proposed to define high-speed broadband connections as information services, which would free providers from the web of regulation that surrounds telecommunication services.

The commission said it has tentatively reached this broadband definition. The issue of defining broadband services is one of a handful of proceedings the FCC is considering that collectively will shape how broadband technology is regulated.

Limiting the risk and uncertainty of regulation and lowering the cost of infrastructure investment are two goals that will govern the FCC's actions regarding broadband, said FCC Chairman Michael Powell.

"We must now clarify the regulatory classification and treatment of these new services, so companies -- incumbents and competitors alike -- know what to expect and can make prudent decisions to build and enter these new markets," Powell said during an FCC meeting last week.

By refraining from painting broadband services with the same regulatory brush as telecommunications services, the FCC would attempt to create a level playing field for service providers in this market -- whether they be incumbent local exchange carriers (ILECs), competitive local exchange carriers (CLECs), or cable network operators, one policy analyst said.

"I think this could be an important first step in terms of creating parity between different providers of similar broadband services," said Adam Thierer, director of telecommunications studies with Cato Institute, a public policy group in Washington, D.C. "Hopefully this is the first step on the road (away from) FCC efforts to pigeonhole new technologies into old regulations."

Yet some broadband providers might not see it that way. CLECs hoping ILECs that offer broadband services would be subject to the same set of telecommunication regulations -- and therefore would be somewhat handicapped -- might see the FCC's leaning towards a deregulated environment as a blow to them, another analyst said.

"Anytime the (ILECs) gain something, the CLECs feel that they've lost," said Scott Cleland, and analyst with the Precursor Group in Washington, D.C.

CLECs have had trouble taking market share away from incumbent carriers, which were formed by the break up of AT&T Corp. into regional bell operating companies and that still own the vast majority of local phone customers as well as the local telephone networks.

Before the FCC makes a new rule, it puts out either a notice of inquiry -- inviting general public comment on a topic -- or it issues a notice of proposed rule-making that includes a tentative conclusion and asks for more specific comments from the public.Thursday's notice of proposed rule-making will be followed by a 60 to 90 day comment period. At the end of that period, the FCC can chose to make its proposal a rule, take a different action, or do nothing.

In this case, however, it's doubtful that the FCC would take no action, since Powell has repeatedly stated that widespread broadband adoption is the commission's number one goal.

"I think (promoting broadband) is all necessary. Right now the whole industry is at a standstill. It could go a long way toward building the economy and establishing a desperately needed new paradigm for telecommunications," said Ron Cowles, an analyst with Gartner Inc.'s Dataquest Inc. research unit in San Jose, California.

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