FCC rules that telcos can cut off DSL resellers

[David Farber <dave () farber net>]

Phone companies cheer DSL ruling
Verizon and other local companies will be freed of some requirements  
to lease lines, FCC says.
August 5, 2005: 2:23 PM EDT
WASHINGTON (Reuters) - Regulators said Friday that Internet services  
provided by Verizon Communications and other local telephone  
companies will no longer have to follow traditional telephone rules.

The Federal Communications Commission unanimously agreed to treat the  
high-speed Internet service, known as digital subscriber line (DSL),  
as an "information service," which insulates it from many traditional  
telephone rules, such as requirements to lease network access to  
competitors.

The designation would allow the big local telephone companies, called  
the Baby Bells, to cut off or potentially negotiate new terms for  
Internet service providers such as EarthLink Inc. (Research) to use  
their networks for broadband.

The United States has fallen to 16th in world rankings of broadband  
deployment per capita, leading Republican FCC Chairman Kevin Martin  
to make rolling out high-speed Internet service to consumers a top  
priority.

Cable and telephone carriers are battling to provide customers with a  
suite of broadband services, like fast Internet access, video and  
voice service, already serving about 37.5 million customers.

The FCC's decision came after several days of intense negotiations  
among commissioners.

Because there is a vacant Republican seat on the five- member FCC,  
Martin had to convince at least one of the agency's two Democrats to  
agree to the new DSL designation.

Martin has been trying to equalize the rules for DSL providers and  
cable companies such as Comcast Corp (Research). The decision follows  
a Supreme Court ruling that backed the FCC's ruling to label cable  
broadband an information service.

Verizon and SBC Communications Inc. (Research), the two biggest local  
telephone carriers, have complained they are at a disadvantage in  
competing against the cable operators because their service has been  
subject to stricter rules.

DSL is seen as attractive because it is cheaper, but it offers slower  
data download speeds than cable service. There are roughly 15.5  
million DSL lines in use, compared with close to 22 million customers  
who get broadband from cable companies.

The commissioners decided to require DSL providers to continue for  
nine months to pay into the universal service fund (USF), which  
subsidizes communications services in certain cases, unless a new  
funding system is developed sooner.

The ruling also provides a one-year transition period for independent  
Internet service providers and the Bells to negotiate access  
agreements for existing customers.

Shares of Verizon (down $0.38 to $33.32, Research) edged lower in  
afternoon trading


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http://money.cnn.com/2005/08/05/technology/verizon_fcc.reut/index.htm? 
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