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|SUBJECT ||Subject: [hangout] More on the Networking Board Band isue
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Subject: [hangout] More on the Networking Board Band isue
From: Ruben Safir
To: fairuse-at-nylxs.com, hangout-at-nylxs.com, amy-at-nytimes.com
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Date: 21 Feb 2003 19:42:11 -0500
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Reply-To: Ruben Safir
List: New Yorkers Linux Scene
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(from NY Fair Use http://fairuse.nylxs.com )
This article strongly calls into question the NY Times ability to report
news on Digital Rights fairly.
February 21, 2003
F.C.C. Leaves Most Rules on Network Leasing in Place
By STEPHEN LABATON
WASHINGTON, Feb. 20 — A deeply divided Federal Communications Commission
today largely left in place rules that are meant to foster local
telephone competition by requiring the four regional Bell companies to
lease their local networks to their rivals at low prices set by state
But in a compromise order, the agency relieved the companies of their
obligation to give rivals low-cost access to many of the crucial
elements of the Bells' new high-speed Internet networks.
The impact, if any, on consumers may take months to become evident and
could vary widely from state to state. Some experts predicted that the
changes could lead to rate increases for consumers of high-speed
Internet services offered by the telephone companies.
The decision was a stinging defeat for the agency's Republican chairman,
Michael K. Powell, and a disappointment for the Bell companies. The
Bells have been lobbying and litigating for years to scrap the rules and
had hoped for a definitive repudiation of them in Washington's new
In a partial dissent, Mr. Powell warned that the ruling would sow
regulatory confusion, prompt a new wave of litigation and do too little
to encourage investment in updating the nation's telephone system. He
said the inconsistent approaches of the states and the lawsuits that are
bound to challenge the new rules "will take many years and will hardly
be the quieting and stabilizing regime that was so craved by a rocky
But another Republican commissioner, Kevin J. Martin, who brokered the
compromise order by joining the agency's two Democrats on some aspects
of it and sided with Mr. Powell and the F.C.C.'s other Republican on
other details, said it was vital for consumers that the states continue
to play a leading role. He said local regulators needed the flexibility
to require the Bells to provide low-cost access to their networks to
assure greater competition in many local markets.
"We have crafted a balanced package of regulations to revitalize the
industry by spurring investment in next-generation broadband
infrastructure while also maintaining access to the network elements
necessary for new entrants to provide competitive services," Mr. Martin
By removing restrictions on broadband — or high-speed Internet access —
but not on traditional phone service, the decision was both a partial
victory and a partial setback for the four regional Bell companies:
BellSouth, Qwest, SBC and Verizon. Those companies' stocks all tumbled
Since 1996, the regional companies have been required to give small
start-up rivals and large competitors like AT&T and WorldCom access to
their local networks at low wholesale prices set by regulators to
nurture the fledging competition in traditional local services.
The outcome was denounced by the Bells, which threatened a new round of
lawsuits challenging the rules, just as they have in the past. Twice
they have succeeded in court challenges, forcing the agency to rewrite
the rules, only to be stymied by the F.C.C. They had hoped that the
commission today would begin to do away with the wholesale pricing
system altogether in favor of a system allowing them to negotiate higher
rates directly with their rivals rather than have the lower rates
imposed on them by utility regulators in the states.
But in the long-running legal, regulatory and political battle among the
various sectors of the telephone industry, the decision today also
offered the Bells some important gains. In a partial granting of their
wishes, the commission ruled that they no longer needed to provide
rivals low-cost access to crucial elements of the new high-speed
Internet networks that the Bells have just started to build.
That provision raised concerns among some Internet access providers,
including Covad Communications and its main marketer, EarthLink, and
prompted predictions by some experts that the cost of high-speed
Internet access services would rise for consumers.
The outcome will now largely be in the hands of state officials. In
recent months some states, notably New York and Illinois, imposed cuts
that reduced some consumer bills by 20 to 30 percent.
Executives at the Bell companies expressed bitter disappointment today.
"This is a major setback for the industry," said Thomas J. Tauke, a
senior vice president and top lobbyist for the largest Bell company,
Verizon, and a former member of Congress. "It's a major setback for
investment. It is a major setback for consumers. It is a deterrent to
make the investments that would be so important to the economy. The
F.C.C. simply blew it."
William M. Daley, a former commerce secretary in the Clinton
administration who is now the president of SBC, called the decision "a
loss for American consumers, telecom employees and advocates of real
But the ruling was praised by some of the rivals to the Bells.
"We applaud the F.C.C. commissioners who forged a bipartisan compromise
to resolve contentious issues that have dogged this industry for more
than half a decade," said James W. Cicconi, general counsel of AT&T,
which has been actively trying to expand its local business in many
states. "While the decision grants the incumbent monopolies far more
deregulation than warranted, it also should permit AT&T and other
carriers to continue to deliver competitive voice and broadband
The F.C.C.'s move was also endorsed by some equipment manufacturers,
including Intel, which are hoping it will encourage the telephone
companies to increase their spending to try to improve their networks.
On Capitol Hill, the rules were criticized both by prominent
Republicans, many of whom had supported the efforts by the Bells for
more complete deregulation, and by Democrats, who opposed the
deregulation of broadband services.
"Market forces once again have been shackled by political forces," said
Representative Billy Tauzin, the Louisiana Republican who heads the
House Energy and Commerce Committee. "This marks a low point for the
Senator Ernest F. Hollings of South Carolina, the ranking Democrat on
the Senate Commerce Committee, said the agency had "missed an important
opportunity to speak with one voice and to provide the
telecommunications industry with greater certainty."
Though Mr. Powell was the F.C.C. commissioner whom President Bush named
chairman in 2001, the decision today was a sign of the emergence of Mr.
Martin, a former official in the Bush White House, as an influential
deal maker at the commission. He said the new set of regulations
"achieves a principled, balanced approach."
"It ensures that we have competition and deregulation," Mr. Martin said.
"We deregulate broadband, making it easier for companies to invest in
new equipment and deploy the high-speed services that consumers desire.
We preserve existing competition for local service — the competition
that has enabled millions of consumers to benefit from lower telephone
rates. And we continue the strong role of the states in promoting local
competition and protecting consumers."
But Mr. Powell, in a strongly worded partial dissent, said that the
decision "could prove harmful to consumers in the long run, and I cringe
to see their welfare raised on the staff of the majority's decision."
"What is remarkable about today's decision is that one looks in vain to
find a clear or coherent federal policy in the choices made by the
majority," Mr. Powell said. His dissent is the first by a chairman on a
major F.C.C. regulation since 1991.
Trying to open local telephone markets to greater competition, Congress
in 1996 adopted landmark telecommunications legislation that required
the regional Bell companies to share their equipment with competitors at
relatively low cost.
The legislation required the federal regulators to determine which
elements of the Bells' networks were necessary for rivals to enter the
market feasibly and to make those elements available on an individual
basis and at low prices.
Regulators ultimately decided to put every element of the network on the
list under a rule formally known as the unbundled network elements
Last year a Federal appeals court, in a victory for the Bells,
overturned the network rules, prompting today's proceedings.
But Mr. Powell and others said that today's decision would shift the
unending and hugely expensive telephone wars back to the states and the
courts. In fact, Mr. Powell's partial dissent virtually invited
litigation, accusing the majority of flouting the decision by the
appeals court and outlining those areas of the proposal that he said
would not withstand legal scrutiny. Dismissing the rules as
"Picasso-esque," he predicted that they would lead to legal and
"The nation will now embark on 51 major state proceedings to evaluate
what elements will be unbundled and made available to the competitive
local exchange carriers," Mr. Powell wrote.
"These decisions will be litigated through 51 different federal district
courts. These 51 cases will likely be decided in multiple ways — some
upholding the state, some overturning the state and little chance of
regulatory and legal harmony among them at the end of the day."
Industry executives, critics and supporters of today's decision also
said that it would shift the battleground to the states and the courts.
"The one clear winner in all this is the state public utility
commissions, and for everybody else it was a mixed bag," said Royce J.
Holland, chairman and chief executive of Allegiance Telecom, a
nationwide competitive telephone company based in Dallas. "The second
biggest winner here was probably the American Bar Association."
New Yorker Free Software Users Scene
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