[February 3, 2005]

With that as a background, here is my take on the regulatory and possible legal issues involved as well as some economic, consumer and technology considerations. Most of my point of view is associated with the fact that I am a rural Internet provider. I believe that there are differences between the telecommunications climate in urban areas versus that in rural areas.

Since regulators and legislators have always recognized the difference between urban and rural operations, those of us in jeopardy of losing our ability to operate out here in the country are in hopes that something can be done, and soon, to give us a level playing field in which to operate. This is not, to quote Michael Powell, a "Hyperbole, chamber of horrors."

Simply put, Local Exchange Carriers, especially at least three of the Regional Bell Operating Companies, are engaged in business practices that insure the demise of rural Internet providers. This means the reduction in the availability of general computer technology in rural areas, higher prices for consumers and less choice.

Now the RBOCs have asked for forbearance, to bless what has already happened and allow the RBOCs to take over the 10 percent of the business they do not yet completely own. I have been attempting to understand FCC rules that govern what a LEC can and can't do in the realm of enhanced services, which is the category where DSL is defined.

If you read Robert Cannon's diatribes carefully, you will be as informed and likely to be as confused as I am. By "Enhanced services," I mean the ISP industry for the purposes of this writing although I suppose that enhanced services include voice mail, caller ID, long distance and the like. As a small ISP, I cannot afford to hire a Telecommunications Attorney, so I have had to do my own research.

I believe that I have discovered a true "Chamber of Horrors," wherein those companies with the cash, the lawyers and the lobbyists have been able to slowly gut the Telecommunications Act of 1996 of any real meaning when it comes to competition. Local Exchange Carriers, most especially including Verizon, SBC and BellSouth, apparently paid lip service to competitive regulations long enough to be allowed into the long distance business and once that benchmark was achieved, began a campaign to kill off as much of that same competition as they could, one incremental regulatory or business structure step at a time.

At one point in time, the FCC was hell bent on ensuring that competition was "allowed" to exist for enhanced and other services. Over time, it would appear that much of the original protection has been either eroded by legal opinion, regulatory activity or ignored. By "allowed," I mean that without the active cooperation of the local phone company, competition is simply impossible.

Robert Cannon wrote "Where Internet Service Providers and Telephone Companies Compete: A Guide to the Computer Inquiries, Enhanced Service Providers and Information Service Providers" in May of 2001 and although he has disclaimers all over the document identifying it as his opinion and understanding—not to reflect that of the Commission itself, his title is: Senior Counsel for Internet Issues, Office of Plans and Policy Federal Communications Commission, which means to me that he should know what he is talking about

I have used his guide in an attempt to discover what the FCC can and cannot do and compare that with what they have really done, if anything, to insure competition. After all, one of their divisions is called the "Wireline Competition Bureau," which may or may not be aptly named.

If someone is gong to compete with the phone company using phone company controlled wires, there are a number of areas of concern, not the least of which are: comparable pricing, business practices, slamming and networks, to name a few.

Please keep in mind while you read this that the Internet revolution is not the product or brainchild of local exchange carriers as a group, or Regional Bell Operating Companies—it is the product of competition and innovation. But if competition is reduced or eliminated, innovation will be eliminated and costs to the consumer will rise even as we lose our lead in telecoms innovation.

Currently there are two methods of delivering broadband to consumers; one is via cable modem and the other through telephone wires (DSL). Yes, there is limited service available via fixed wireless using regulated and unregulated bandwidth, but that methodology has a very limited footprint. And yes, there are all sorts of possible new sources to include distribution via power lines and through G3 technology, but neither is likely to have much of an impact for years. It should be noted that the two largest wireless providers are Verizon and SBC/BellSouth. 802.11 as a delivery method, has limited availability and suffers from reliance on unregulated spectrum. Satellite, as a delivery medium, suffers from the need for high price and issues with transmitters.

Cable isn't ubiquitous; telephone wires are. And the technology exists to bring broadband DSL to virtually every phone line in the United States; all that is needed is deployment. In those cases where the customer is located beyond the reach of DSL or subject to "Digital Single Carrier," the technology exists to extend the range of broadband. There are no real limitations except in a very, very few rural situations where the cost might be prohibitive.

Broadband is cheap to deploy. The capital cost for DSL equipment is between $75.00 and $100.00 per customer served. In rural areas where "Pair-gain" equipment is used extensively, there is an additional capital cost requirement to change out older field terminals for new ones that will pass DSL traffic in those areas where a BOC wants to make the investment.

 

1. Background

what the RBOCs really think about competition

missing the Internet revolution

Robert Cannon

>2. Pricing and Cost Issues: predatory prices crush competition

RBOC costs, for the record

3. Business Practices

4. Slamming and other dubious business practices

5. Networks

6. Customer Service

7. VNXX

8. Verizon's Petition for Forbearance

9. Unintended Consequences

10. Conclusion

RBOCs, why you need me