IP-FLASH Intel's Position on Broadband Regulation -- FROM INTEL

[David Farber <dave () farber net>]

> From: "Pitsch, Peter" <peter.pitsch () intel com>
> To: "'David Farber'" <dave () farber net>
> Subject: RE: Intel's Position on Broadband Regulation
> Date: Fri, 2 Nov 2001 13:22:58 -0800
>
> Dave,
>
> In the past week a few people have commented on Intel's position on
> broadband regulatory issues before the FCC. As you know, I work in Intel's
> Government Affairs office in Washington, DC. Here are a few comments that
> may clarify Intel's position for your readers. A fuller explanation can be
> found in our pleading in the FCC's Section 706 proceeding.
>
> 1.      Intel has asked the FCC to review its regulations to determine
> whether they are impeding the deployment of new last mile bb facilities. In
> particular, we believe that extending "unbundling" regulation to the
> incumbent telephone companies' new overlay bb facilities in the last mile
> will inappropriately discourage this investment. We continue to support
> unbundling of the ILECs' legacy, bottleneck plant, principally copper lines
> and central office (CO) space. (BTW,we took essentially the same "pro bb
> deployment" position on the cable access issue--that time siding with AT&T
> and other cable companies and against the ILECs.)
>
> 2.      We believe this policy will promote deployment. DSL availability and
> speeds will be severely limited unless fiber is laid from the COs to (at
> least) the neighborhoods. SBC's Project Pronto represents such an effort--$6
> bil. to lay 12,000 miles of fiber and install or upgrade 25,000 remote
> terminals. This type of investment is expensive, risky and discretionary. If
> regulatory policy gives the carriers a 100% of the risk but effectively caps
> the upside, we will get less of it.
>
> 3.      Some see this as granting the ILECs a monopoly. But that begs the
> question: monopoly of what? Service capabilities and  market experience
> demonstrate that cable modems and DSL are likely to be good substitutes for
> most residential customers. Does it really make sense to say the ILECs will
> have monopoly power, when in the more relevant broadband market cable has a
> 3:2 advantage in availability; a 2:1 lead in subscribers and most important
> of all is the low cost technology. (BTW those are the conclusions of
> McKinsey and JP Morgan.)
>
> 4.      This position does not represent a rejection of the '96 Telecom Act.
> The necessary changes can be made by the FCC and the states. (Intel is
> neutral on Tauzin/Dingell.) Under Sec. 251.d.2 the FCC must determine which
> network elements get unbundled.
>
> 5.      Lastly, a word about Intel's motivation in weighing in on this
> matter. Yes, broadband will benefit Intel and the whole high tech sector,
> but the larger society will benefit tremendously as well. And Intel has no
> "broadband axe" to grind. It only benefits to the extent that broadband is
> available to consumers and they see fit to buy it. It is then that we expect
> to see the bandwagon effects with which we are all familiar in the PC
> hardware and software markets. In that sense, it is fair to say that when it
> comes to broadband our interests are congruent with those of consumers. I
> think the record will show that at various points over the past 3 years we
> have sided with and against everyone of the competing broadband factions.
> Throughout, our goal has been to make high bandwidth broadband widespread
> and affordable.
>
> Peter