F.C.C. Begins Rewriting Rules on Delivery of the Internet

[Dave Farber <dave () farber net>]

F.C.C. Begins Rewriting Rules on Delivery of the Internet

February 12, 2004
 By STEPHEN LABATON





WASHINGTON, Feb. 12 - The Federal Communications Commission
began writing new rules today that officials and industry
experts said would profoundly alter both the way the
Internet is delivered and used in homes and businesses.

In one set of proceedings, the commission began writing
regulations to enable computer users to gain access to the
Internet through electric power lines. Consumers will be
able to plug their modems directly into the wall sockets
just as they do with any garden variety appliance.
Officials said the new rules, which are to be completed in
the coming months, would enable utilities to offer an
alternative to the cable and phone companies and provide an
enormous possible benefit to rural communities that are
served by the power grid but not by broadband providers.

In a second set of proceedings, commissioners began
considering what rules ought to apply to companies offering
Internet space and software to enable computer users to
send and receive telephone calls.

A majority of the commissioners suggested that the new
phone services should have significantly fewer regulatory
burdens than traditional phone carriers. The agency also
voted 4-to-1 to approve the application of a small Internet
company, Pulver.com, asking that its service of providing
computer-to-computer phone service not make it subject to
the same regulations and access charges as the phone
carriers.

Industry experts say that neither the phone service nor the
broadband delivery systems offered by electric companies
will take any sizable market share for at least the next
two years. But in moving forward with the new regulations,
they said the agency was reducing regulatory uncertainty
and encouraging major companies and investors to make
investments in the new technologies to enable them to move
to market more quickly.

The F.C.C. chairman, Michael K. Powell, and his two
Republican colleagues on the commission said the agency's
decisions on the two sets of rules and the Pulver
application would ultimately transform the
telecommunications industry and the Internet.

"This represents a commitment of the commission of bringing
tomorrow's technology today," Mr. Powell said. He added
that the rules governing the new phone services were
intended to make them as ubiquitous as e-mail, and at
possibly a significantly lower cost than traditional
phones, since the services would have lower regulatory
costs.

A Republican commissioner, Kathleen Q. Abernathy, said that
the agency and industry "stands at the threshold of a
profound transformation of the telecommunications
marketplace" as more companies - including such giants as
AT&T and Verizon - move from circuit-switching phone
technology to Internet-based technology.

But one Democratic commissioner, Michael J. Copps, raised
objections to the Pulver petition and questioned the
underlying themes of deregulation in the two rulemaking
proceedings. He said that they had set the agency on a
course that could effectively rewrite the
Telecommunications Act of 1996 and make it easier for the
incumbent phone companies to escape necessary regulation.

Mr. Copps also criticized the majority of the commission
for rejecting a request by law enforcement agencies that
the F.C.C. first work out the legal and technical problems
in monitoring phone calls over the Internet before granting
Pulver's application or considering new rules for the
Internet-based phone services.

"I believe it is reckless to proceed, and I cannot support
this decision at this time," he said of the Pulver
application. "The majority apparently prefers to act now
and fix law enforcement issues later - along with universal
service, public safety, disability access and a host of
other policies we are only beginning to address."

Mr. Powell replied pointedly to Mr. Copps's criticism that
the agency was rewriting the Telecommunications Act by
offering a new deregulatory climate that the old phone
companies might seek to take advantage of.

"We can talk about rewriting the Telecommunications Act,"
he said. "But the Telecommunications Act is nine years old
and it is being rewritten by technology."

http://www.nytimes.com/2004/02/12/technology/12CND-NET.html?ex=1077634072&ei=1&en=24d742f140f92a46

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