ISPs Organize Against Re-Monopolization

A new coalition of approximately 300 national, regional, and local ISPs says it plans to oppose broadband deregulation proposals currently before the Federal Communications Commission (FCC).

by Roy Mark of dc.internet.com [June 19, 2002]

Claiming nothing less than the "future of competitive broadband markets" is at stake, the BroadNet Alliance, led by WorldCom, EarthLink, and a dozen state ISPs, contends that competition, not deregulation, should be the focus of the FCC's efforts to quicken pace of broadband deployment in the U.S.

Competitive retail Internet services exist in the U.S. largely because of FCC rules that ensure non-discriminatory access to wholesale transport services provided by incumbent monopoly carriers (the Baby Bells). The important distinction between the regulated telecom infrastructure and the unregulated Internet services that ride over it has allowed for an explosion of Internet access and services, albeit at mostly at slow connection speeds.

But with only 10 percent of Americans subscribing to high-speed broadband, both Congress and the White House have been clamoring for faster deployment to spur the sluggish economy. Several bills are being debated in Congress that aim to accomplish widespread broadband deployment. President George W. Bush has also endorsed the idea of broadband in every home and, last week, endorsed the approach being taken by the FCC.

The agency is currently considering trimming regulations through long-disputed interpretations of the Telecom Act to allow the regional Bell operating companies to more easily enter the broadband market. Under current regulations, the Bells must make their DSL lines available to their competitors (i.e., BroadNet members) under the provisions of the 1996 Telecom Act. Cable companies, however, are not required to share their broadband lines. The Bells claim the regulations put them at a competitive disadvantage with cable and are slowing the deployment of broadband over telephone lines.

"The incumbents are running around like Chicken Little saying that the sky is falling and that there is a huge broadband crisis," said Maura Colleton, executive director of the Washington, D.C.-based BroadNet Alliance. "But the sky is not falling. The truth is, until consumers have compelling broadband content and meaningful choices, the adoption of broadband will remain low. Extending the power and reach of monopolies will only send prices higher and services lower, handicapping the demand side even further."

BroadNet also points to the FCC's own data in its arguments against deregulation. Earlier this year, the FCC released its third annual report to Congress on the availability of advanced telecommunications services, reporting that broadband services are being rolled out across the nation in a "reasonable and timely manner." The report also notes that broadband is available to almost 90 percent of Americans, although only 10 percent have chosen to subscribe to these advanced services.

"Of great concern to BroadNet, the report also found that incumbent telephone monopolies still control 93 percent of access lines, and are the dominant providers of wholesale last-mile DSL services," said Collecton. "There is a fundamental misunderstanding between wholesale and retail deregulation. If the FCC allows the Bells to extend their monopoly to the Internet, that would constitute some of the most astoundingly anti-consumer public policy to come out of Washington in years."

According the BroadNet Alliance, the Bells use their dominant market position "to continually raise prices for wholesale and retail DSL products. And through heavy-handed pricing schemes, they have succeeded in limiting the ability of independent providers to offer high-speed Internet services."

Currently, more than 7,000 ISPs serve U.S. consumers, from small community-based providers to national providers who cover all 50 states. Though the retail market is competitive, Internet and broadband service providers remain wholly dependent upon the incumbent telephone companies who control access to that underlying infrastructure.

Without the incumbents' facilities, ISPs would be unable to provide services to consumers. The BroadNet Alliance contends that as long as monopolies retain control over that access, regulators must protect the existing right of ISPs to use these facilities.

"The Bells have both the ability and the incentive to discriminate against non-affiliated ISPs, and do so at every opportunity," said Dave Baker, vice president of law and public policy for Atlanta-based Earthlink. "How on earth can any policymaker anywhere justify making that even easier for them? How would that possibly help the American consumer?"

FCC Chairman Michael Powell has long said that competing broadband technologies, such as telephone, cable, satellite, and wireless, are sufficient competition. It's a policy he's been consistent with, even though it has spelled doom for many ISPs and CLECs.

"How America chooses to deploy broadband is one of the most central policy issues of our time. Though there are many voices on the traditional long distance, cable and local telephone sides, the country's independent broadband providers have lacked a clear voice in the debate," Colleton said. "BroadNet will fill this void—putting the focus where it belongs: on competition, rather than 'deregulation.' One definitely does not equal the other."

— End