FCC chairman discusses telecom, broadband issues

In a moderated question-and-answer session at the Forrester Telecom Forum, Federal Communications Commission Chairman Michael Powell deftly weaved through a maze of questions on topics ranging from local broadband deployment to rising Digital Subscriber Line (DSL) prices to the meaning of telephone service competition.

And while Powell's comments at the conference were often studied and reasonable, he was noncommittal about the effects of recent FCC decisions and their ramifications for consumers.

"We saved the hardest until the last," Powell said in response to a comment on the government's role in busting the competitive hold When asked about the government's role in breaking the competitive hold by regional Bells on local access as outlined in the Telecommunications Act of 1996 Powell reminded the audience of telecommunications and network executives that the local phone system has been in place for 100 years.

And he noted it was originally a state-sanctioned monopoly model that couldn't easily, or quickly, be dismantled.

"The notion that 100 years of development, the architecture itself and the associated policy, was going to be eviscerated on a five- or six-year time horizon [was a concept] I struggled with as a fantastically naive expectation.

"These [local markets] are very tough markets to enter under any circumstance," Powell said. They're like construction projects, he noted, and it takes a long time to produce infrastructures that can compete against the entrenched phone companies.

"I'm kind of reluctant to fall into the trap of [suggesting] either success or failure," he said.

Moreover, he cautioned that companies and consumers shouldn't confine their view of competition to the voice offerings of regional Bell look-alikes. "I think what we do [for competition] is to place our hope on services differentiated by key technologies to provide the choice that consumers want," he said.

Powell said he finds it interesting how people define local competition. "I've been think thinking a lot about this," he said. "People say it's failed. Why do we assume this?"

Powell noted that the e-mails he sends to his mother and the instant messages he sends to his sister are competitive alternatives to picking up the local telephone. And he said, "We underestimate the value of wireless as a substitute for local services.

"I make numerous calls from the driveway in front of my front yard while I'm gardening," Powell said, "and I haven't picked up a phone in a hotel in five years. That's all coming out of what would have been a traditional call by a local telephone company."

While acknowledging that prices for DSL and cable broadband are increasing, he said it's important to maintain a "rational regulatory environment" that minimizes the business risk of deploying new services.

"I personally don't know whether the price rises are justified or not," he said, adding, "I think they're going to hurt growth.

"Consumers are frustrated . . . about the promises we've peddled," Powell explained. "They're not having good experiences in the marketplace right now. Anyone who's got DSL will tell you the same horror story on how it took forever, how it didn't work, how [provider technicians] had to come back. And then it costs you $10 more!"

But Powell said service providers, be they regional Bell companies or competitive local exchange carriers, also are hurting from high upfront capital costs for infrastructure changes needed for broadband deployment.

There's little doubt that a robust data infrastructure will be important to the U.S., he said.

"I think the goal of the country is that we want it ubiquitous, available to all Americans, affordable to all Americans,' he said. "But how we achieve that is multifaceted."

He added a note of caution, however, warning against carrying over the system of universal subsidies from the common carrier telephone into broadband services.

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