DSL Prime: Politics

As the FCC realizes it gets nothing for handing the Bells everything, some last minute negotiations might mitigate the anti-competitive damage of the recent FCC ruling.

by Dave Burstein DSL Prime [April 28, 2003]

DC: ain't over till it's over
D.C. wonders why Martin is meeting with Hoffman
Unconfirmable rumors are swirling that the final FCC decision will at least make a gesture to preserve linesharing, especially after SBC is refusing to build. While that would be good public policy, the politics at this stage are hard. Kevin Martin personally ended the line-sharing requirement, in an unusual victory on a vote of one in favor, four against. Copps and Adelstein announced they were voting for Martin's package, including the end of mandated line-sharing, in order to win Martin's agreement on local voice competition. "We are playing fast and loose with the country's broadband future," Copps stated. "Today we may be choking off competition in broadband." Powell agreed that the decision "will lead quite quickly to higher retail prices for broadband consumers."

Personal apologies to Mike Powell
One of my worst reporting mistakes ever was saying, "Powell is apparently cutting a private deal with Seidenberg and Whitacre. He will give them less competition, and they will promise to build out a fiber or VDSL network. Powell hopes to change a public relations disaster into a dream of a brighter future. (January 25)." In fact it was Kevin Martin being tempted by telco promises. I had just heard Martin saying he would take a dramatic risk to protect competition, as he did preserving local UNE-P's in some states, and had previously heard Powell denigrate line-sharing as unnecessary and probably counter to court rulings. Martin in December recommended deregulating new "fiber to the home" but not DSL or wireline DLCs unless they provided services more sophisticated than today's. So I made a logical guess, and was wrong.

The rest of my story was right, as Verizon and Martin (not Powell) demonstrated March 20. Verizon reiterated part of their DSL buildout previously announced in 2000 and 2001. They also spoke of beginning early experiments toward fiber —something they have been publicly promising since 1995, and reaffirmed strongly in 2001. Welcome, sensible strategy, but not any improvement because of FCC action.. Martin replied a few hours later "I applaud Verizon's statements this morning." Martin's no fool—his statement carefully said "renewing the company's commitment," because of course Verizon was only going back to their previous plan before the D.C. games broke out.

Until the night before the decision, Martin was still allowing linesharing
Robert Lee in ePrairie reports the same thing I heard on the morning of the 20th, as the public hearing was delayed for hours to draft new proposals. "At midnight, Hoffman received a depressing phone call from Jason Oxman, Covad's regulatory lawyer. Oxman told him that one of the staffers who had written the draft just called and told him the whole thing had gone awry and Martin had gotten the Democrats to totally abandon the telephony of the future (consumer broadband) in return for not only preserving standard UNE-P voice but also turning the whole matter over to the states (safely away from chairman Powell). "

The compromise Martin killed
Martin had been very clear: "Provide Regulatory Relief for Hybrid Facilities but Ensure Continued Access..." is the heading from his December 12 speech. He gave the example "competitors receiving access capacity at 1.54 Mbps per second using pre-existing ILEC facilities would be able to continue to receive such access capacity at the same bit rate under newly deployed hybrid facilities." Then the lobbyists persuaded him to kill that.

The industry calls this "logical loop unbundling", and in fact all the CLECs and a Bell at the highest levels had accepted the compromise, as I reported last year. That was the clearest explanation of Verizon's Tauke plan, "new rules for new wires". Instead, Martin chose "No rules for new wires" and according to the February announcement "No rules for many of the old wires, as well." Martin went much further than Larry Babbio of Verizon had asked.

Who influenced the FCC
Martin made his decision after Andy Grove of Intel, Niel Ransom of Alcatel, and a slew of distinguished technologists told the FCC that a monopoly was the best way to get more broadband in the U.S. and especially the fiber build. Martin credited the ad-hoc High Tech Broadband Coalition for his decision, where Peter Pitsch of Intel and Matt Flanigan of TIA were leaders. A HTBC letter January 24 opposed "imposing minimum bandwidth unbundling obligations on the ILECs' last mile integrated packet/fiber facilities."

Martin believes strongly in bringing the Internet to everyone, is smart, and while ambitious has given no evidence of corruption. Following the judgment of some of the best technologists, some disinterested, seems honorable. Most of the world believes ""Successful broadband economies are characterized by low prices as a result of flourishing competition," as the ITU just reported.

Judging the results
Policy should be judged by results, not the hot air of lobbyists slogans. If the bells offer broadband to 90 percent of their customer before 2004, Martin might not have made a mistake. Or if the U.S. sees a substantial fiber build soon, say 10 million in 2005, the extra billions consumers will pay might be a fair tradeoff. When Powell and Martin took over two years ago, 80 percent broadband was promised for 2002, hundreds of thousands of lines of fiber in place (BellSouth), and both Verizon and SBC had major plans to deliver fiber.

I hope I'm wrong, and that the bells, in return for their DSL monopoly, build significantly more than they already promised. That's what Ivan Seidenberg promised Andy Grove. If they don't, FCC broadband policy under Powell and Martin has failed, and I hope future voters pay attention.

Copyright 2003 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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