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Rich Tehrani

[October 15, 2004]

Is the FCC Stifling Competition?


Yesterday the FCC announced that it has taken further steps to encourage deployment of fiber-to-the-home (FTTH) (define - news - alert) by allowing incumbent carriers to avoid leasing of their lines where they are extended to within 500 feet of a customer premise. The 500-foot rule basically extends the rule to the curbside, which is referred to as fiber-to-the-curb or FTTC (define - news - alert). Michael Powell released a statement about how good this move is for the market and how it allows greater triple-play (define - news - alert) opportunities.

Commissioner Michael Copps released a dissenting statement which requires close examination:

“Though today’s Order speaks in glowing terms about broadband (define - news - alert) relief, the reality is far less radiant. I don’t believe competitive telecommunications have been faring very well under our watch and this particular proceeding strikes me as yet another in a series of prescriptions this Commission is willing to write to end competitive access to last mile facilities. It seems every month brings a new onslaught.

“I did not support the basic approach embraced here when the Commission set out to restrict access to fiber loops in the Triennial Review. So it will surprise no one that I do not support it here with the majority venturing even deeper into the denial of access to bottleneck facilities. By expanding the fiber-to-the-home unbundling exemption to fiber-to-the-curb architectures—a huge step even in light of the dramatic competitive restrictions in the Triennial Review—this decision restricts broadband competition for residential consumers. It also constitutes an ominous precedent for the small business community. Neither does it bode well for independent providers of VoIP (define - news - alert) services who don’t own or control the physical layer of the network.

“Here is why I think this approach is dangerous. The loop represents the prized last mile of communications. Putting it beyond the reach of competitors can only entrench incumbents who already hold sway. Monopoly control of the last mile created all kinds of problems for basic telephone service in the last century, and now we seem bent on replicating that sad story for advanced services in the digital age. Unfortunately, the digital age is going to take a lot longer to get here because of the blows we are inflicting on competition.

“In the Triennial Review, the majority started down a hazardous path. They began by exempting fiber-to-the-home loops from competition. Last summer the majority extended this exemption to ‘primarily residential’ buildings. In doing so, they blurred the line between mass market and small business customers. As a result, millions of small businesses located in buildings that also have residential apartments are now going to be denied the enhanced services and lower prices that competition can bring. Now, today, the Commission treks even farther down this road by exempting fiber-to-the-curb facilities from competition. And they add to the damage by adopting an incomprehensible routine network modification policy.

“If we aren’t going to listen to consumers, one would think this Commission would at least listen to the investors who wrote us again last week that our broadband policies are undermining competition, undermining facilities-based carriers who need last-mile access to service small business customers, and undermining the confidence of investors who want to put money into this kind of competition—in fact who have already done so!

“It doesn’t take a compass to see what direction this is heading. With fewer and fewer loops available to competitors, more and more control will be wrestled away from consumers and placed with the entrenched owner of the last-mile facility. By shutting off the last mile to competitors, the Commission is not ushering in a new era of broadband. It is returning to the failed and non-competitive policies of the past. Residential consumers, small businesses, edge providers of VoIP and others who rely on competitive broadband will be stuck with the consequences, and the consequences will be with us for a long time and will, I predict, kick us farther down that broadband penetration ladder where your country and mine now ranks Number 11. Number 11.

“I think the policy is wrong, I think it’s dangerous, I think it runs against the direction set by Congress, and I feel compelled to dissent.”

Competition is the cornerstone of this country and it has proven to be an amazing catalyst for super high-speed broadband deployment around the world. The question remains how to get investment in fiber to speed up while giving consumers maximum choice. If long distance phone service is any indication, it is obvious that competition among VoIP providers lowers prices very quickly. Consumers always win when many are fighting over them. The question is how to get fiber in the ground so that there can be something to compete over.

This is a sticky issue which I hope is not closed for discussion. We need competition in broadband to give consumers real choice. Let’s hope for some sort of compromise to be reached in the future.

Rich Tehrani is TMC's president. He welcomes your comments. Participate in our forums.

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