Something for Everyone to Hate in FCC Vote

In something less than a shocker, federal regulators handed down a mixed decision on new telephone competition policies Thursday.

The assorted protestations could be heard from nearly all political corners in the aftermath of the Federal Communications Commission's 3-2 vote, which hands much of the controversial pricing control jurisdiction to state regulators. But industry observers noted little, if any, immediate implications for the companies affected by the decision.

The lack of any sweeping reversals to the Telecommunications Act of 1996, and the prospect of a prolonged legal battle to rescind the FCC order, left many observers to conclude that we are in for many more months of the status quo.

Glaciers

"The dominant players and the dominant suppliers to those players will not be affected very much by today's decision," said Communications Industry Research analyst Mark Lutkowitz. "This is just one more move in a very slow process."

The four giant local Bell companies -- Verizon (VZ), SBC (SBC), BellSouth (BLS) and Qwest (Q) -- had argued the loudest about the hardships of the current policy, which required them to rent their networks to rivals at steep discounts. The FCC voted to remove mandatory discounts for competitors in the business market, and gave the states three years to end pricing rules for residential competition.

On the Internet front, the FCC was decidedly hands-off, making no demands on the Bells to provide wholesale access to new generation networks at mandated rates. And the agency even removed line-sharing provisions for ISPs that don't also sell phone service.

In a dissenting opinion, FCC Chairman Michael Powell praised the committee's decision to leave the Internet largely unfettered by excess regulation, but he condemned the agency's move to let resellers benefit from Bell subsidies.

Red Storm

In Powell's view, competitors should be forced to build their own local phone networks. These costly construction efforts would not be wasting money on redundant parallel networks, but rather serve as a double secure communications system in the event of attack, Powell seems to argue.