With industry-altering changes looming on the federal regulatory horizon, ISPs and CLECs are striving to make their voices heard in the high-level policy debate.

by Ted Stevenson ISP-Planet Executive Editor [June 2, 2003]

Citing a long history of customer abuse on the part of U.S. RBOCs, and a competition-killing proposed rule change that does away with line sharing, advocacy organization Teletruth and the Texas ISP Association (TISPA) jointly filed a petition with the Federal Communications Commission urging it to enforce current existing laws protecting the interests of small, telecom-intensive businesses and their customers, and to fulfill its duty to be responsive to comment from those affected by its rulings. (Download petition: .doc version; PDF version.)

Crafted by Texas-based telecommunications attorney W. Scott McCollough (of Stumpf, Craddock, Massey & Pulman in Austin, Texas), the petition addresses six primary issues:

1. The necessity of proper enforcement of currently existing laws protecting small "telecom-intensive" businesses (including ISPs and CLECs) and their customers from anti-competitive behavior on the part of incumbents.

2. Whether current existing laws are adequate to protect those businesses and their customers.

3. Whether the Commission has an accurate picture of the current state of the ISP industry and its impact on broadband deployment in the U.S.

4. The need to investigate the failure of ILECs to fulfill long-standing broadband deployment commitments before the Commission removes their line-sharing obligations.

5. The Commission's obligations under the Regulatory Flexibility Act to understand and fully consider the interests of small telecom-intensive businesses as part of any significant regulatory action.

6. A Broadband Bill of Rights, and the question of whether the Commission's complaint process is working for small business.

Double-barreled salvo
Last February, in the context of its "triennial review" of rules relating to the Telecommunications Act of 1996, the FCC issued a Notice of Proposed Rulemaking that contained two watershed provisions likely to drastically change the U.S. telecommunications landscape. While the proposed change retains the requirement that ILECs share their local phone networks with competitors, it hands over to the states the responsibility of shaping a regulatory framework, creating what some have called regulatory "chaos," with no consistency across the many jurisdictions that constitute the U.S. More ominously, it eliminates the sharing requirement for data networks (at least "upgraded" ones), in effect, placing in jeopardy the provision of DSL services by non-incumbents (CLECs).

The reasoning behind the FCC's proposed deregulation of data networks is that the Bells are "de-incentivized" to upgrade and expand their networks, bringing broadband to rural and other underserved areas of the U.S. if they are obliged to then lease those networks to competitors at regulated rates.

Teletruth and TISPA contend, among other things, that the Bells have repeatedly failed to honor specific quid-pro-quo commitments to broadband buildouts while benefiting from regulatory concessions granted in the expectation of bringing about such expansions. This, according to the petitioners, constitutes anti-competitive behavior on the part of the ILECs. As mentioned, the petition also calls into question the FCC's failure to hold the ILECs accountable for these breaches.

More bad
Another instance of anti-competitive ILEC action is a practice—referred to as "predatory pricing" or the "price squeeze"—where, freed from regulation of bundled-element tariffs, the Bells are setting "wholesale" prices for CLEC resellers very close to their own retail prices, then throwing in free bonuses to end users (modems, service bundles, etc.) that CLECs and ISPs buying from them cannot match with any expectation of profit.

Similarly, Teletruth and ISP industry organizations assert that since the onset of line sharing, the Bells have "exploited their monopoly over the local loop" through a concerted campaign of foot-dragging that results in unacceptable installation delays. And, again turning to the FCC's role, they point up the commission's unresponsiveness to thousands of complaints.

The petition goes on to detail a number of possible courses of action that would remedy the various ills it enumerates, and strongly urges the commissioners to carry out its responsibilities, as defined under a variety of Acts of Congress.

Eleventh hour: What to do?
Hoping to create some cohesion in the provider community and to lend political weight to the provider side of the debate—even at this late date—TISPA has posted some cogent commentaries about current and proposed FCC actions on its website. It is encouraging ISPs and others to sign up to stay informed on developments. Another page allows visitors to post comments directly into a database that will be delivered to the FCC. Finally, and perhaps most to the point, TISPA has also provided a web page where service providers (and others) can actually become signatories to the petition.

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