The Last Green Mile

Is restricting competitive carrier access to ILEC UNEs (Unbundled Network Elements) a good thing? Dave McClure with the US Internet Industry Association (USIIA) appears to think so in his recent ISP-Planet article titled "Tauzin-Dingell Bill Good for ISPs".

by Fred Goldstein and Allen Marsalis [May 30, 2001]
Fred Goldstein is a Consultant for a major consulting firm. Allen Marsalis is President and CEO of ShreveNet, Inc., an ISP in Shreveport, LA.

In this article, McClure proposes that the Internet Freedom and Broadband Deployment Act of 2001 (H.R. 1542) "represents some of the strongest support for ISPs ever set forth in legislation" and is actually good for ISPs across the nation, especially small and medium sized local and regional ISPs.

Many ISPs disagree. The facts of the bill and amendment remain strongly anti-ISP. Not only would the Internet itself remain unregulated, a fact of life which is simply not in question anyway, but States as well as the FCC would be banned from regulating the price of broadband telecommunications services, such as T1 lines, used by ISPs. Data-oriented CLECs would lose the right to share loops, and thus be largely shut out of business. Voice carriers, absent the ability to do DSL bundles or voice-over-DSL, would not be competitive for very long. ISP's would have no DSL competitors to purchase service from in the likely event of unreasonable rates, terms, and conditions in such an unregulated monopolistic environment. This bill is an ILEC's greatest dream!

Good for ISPs?
The only "nondiscrimination" seen in the Tauzin bill is its affirmation that Bell DSL services can be connected to multiple ISPs, not just the Bells' captive ISPs. The bill does require the ILECs to sell service to ISPs at (unregulated) uniform prices, but that's merely an affirmation of their existing incumbent carrier status. The bill adds nothing. The deck is still stacked to favor captive ILEC-affiliated services. It's like McClure celebrating that from now on, Christmas will be celebrated every December!

Yet what does the bill take away? One thing is any hope of an ISP becoming an ISP-CLEC and provisioning its own flavor of DSL service. And that takes away from innovation right there. It affirms the right of most subscribers within 15 kilo-feet of the CO to subscribe to ILEC DSL within five years, but does nothing for the rest of us.

ILECs are allowed, but not required, to make efforts to serve these more difficult places. CLECs, some of whom use technology with longer range than ILECs, may lose their existing access to those subscribers. Lack of true competition also historically deals a blow to innovation.

The USIIA?
So how can McClure make such an opposing claim? Well you would have to start by looking at USIIA, which is not an Internet trade group, or pro-ISP group as ISPs know it. Verizon is a member, along with a few e-commerce component shops.

USIIA's big issues seem to be reciprocal compensation, taxation, and open access on cable. The latter is a key issue for Verizon to carry out their blood feud against AT&T by attempting to get the cable industry demoted to common carrier status, which would strongly discourage cable modem development.

Now USIIA is taking a position on H.R. 1542 and its amendments. But is that the position taken by the thousands of local, regional, and national ISPs across the nation? Or is it the position of four very large ILEC.nets? The fact is that the USIIA is a Bell lobbying group in disguise.

Dead man walking?
But after recent events in the Senate, many ISPs and other industry experts think the bill is dead already. The power shift in the Senate brought on by the defection of Senator Jeffords from the Republican party may have very well dealt a blow to its passage in the Senate.

Telecom is a nonpartisan issue. However, Senate Commerce Committee outgoing Chairman McCain was rather neutral on these issues, and would have allowed Tauzin's bill through if pushed hard enough. Not that he liked it. Incoming Chairman Hollings is openly pro-competition, so the bill has little chance of getting by him. Assuming no more surprises (for instance, so long as Miller doesn't jump to the Republicans), the Tauzin-Dingell bill is dead.

Not that every industry expert now thinks the bill is a dead man walking. David Rendall, group vice president for Gartner Consulting predicts,

"This legislation will become law and will change the telecom world we live in, and everyone needs to get ready for that change."

Many industry experts believe Rendall is flat-out wrong. Now if the bill were to pass, he's right in that it would change things. We'd be back in, oh, 1976 or so. Absolute monopoly on most local service, monopoly-pricing way out of line with cost, a modicum of competition in long distance, but at least post-Carterfone strong competition for terminal equipment. Dingell-Tauzin essentially puts CLECs out of business unless they are cable TV players doing it on the side, or have a very unusual business plan that works in niche markets.

The solution
The rules that govern ILECs are dated. What is fairly up-to-date is the FCC's policy on unbundled loop access, which evolved between 1996 and 1999. The current rules are quite favorable to CLEC-provided DSL. However, enforcement is the problem. ILECs barely live up to even the letter of the rules—let alone their spirit.

Our industry needs to see a resurgence of support for true free enterprise and fair competition, because in addition to the obvious, most experts believe telecommunications to be a major stimulant to the economy and business that stems from it. If the Senate puts up a reasonable fight and pushes for more competition, maybe it will stimulate investment and help to get things back on track.

—End

Editor's note:
Please take a moment to read H.R. 1542 in its current markup language.