FCC Urged to Act in Broadband Battle

Industries resist heavy regulation but want an equal footing in rapidly growing broadband market.

Simone Kaplan, Medill News Service

WASHINGTON, D.C.-- When it comes to regulating the future of broadband access and to other Internet issues, the Federal Communications Commission is stuck in the past, say a panel of telecommunications experts.

In an FCC briefing this week on open access to broadband technology, three telephone and cable industry experts disagreed on whether the government should regulate the high-speed Internet access technology. They agreed only that the FCC needs to get up to date on technology issues if it's to set a national policy.

"The FCC is locked in an ice age when it comes to how they think telecommunications and the Internet ought to be regulated," said John Frantz, vice president and general counsel for Verizon Communications. "We need a national policy to level the playing field." (See "FCC Delays Broadband Probe.")

Panelists agreed a national policy governing open access is needed. But they couldn't agree on the policy itself.

Cable's Advantage

Regulating the cable industry would only restrict competition, said a representative of that industry. But cable companies could monopolize the broadband market if the FCC doesn't impose some rules, cautioned an official of a telecommunications carrier. Carriers' broadband access services are tightly regulated. (See "Telcos Learn to Share Net Access.")

Without regulation, phone companies say, cable companies could dictate who can connect to a system and where customers can go once connected. The FCC is investigating the need for regulation, but otherwise maintains a hands-off approach, saying it intends to foster competition.

Cable companies approve of the FCC's stance.

"The best policy is the one we've adopted to allow the hands-off market approach we've had in place for the last three to four years," said panelist David Brenner, vice president of law and regulatory policy at the National Cable Television Association. "Should the FCC mandate third-party access to broadband? I think it's too early."

Telecommunications officials argue the FCC should impose regulation across the board. Otherwise, a Microsoft-like monopoly could emerge to constrict consumer choice and access to broadband.

"Why, if we need to foster competition in the DSL market, is it not important to do the same on the cable side as well?" Frantz said.

Leveling the Field

The phone companies' frustration is well-placed, says one industry expert.

"I'd be very concerned about any attempt to regulate [broadband], but the phone companies have a very good point," said Robert Crandall, a senior economics fellow at the Brookings Institution, a nonpartisan think tank. "Right now, they can't offer broadband without state regulation." Crandall suggests the FCC deregulate the phone company side of digital subscriber line, instead of regulating cable, to put the competitors on equal footing.

The FCC needs to decide whether cable modem access is purely a cable service, a telecommunications service, or an information service before it can decide on regulation, legal experts note.

"The [FCC] could even declare cable to be an essential facility and promote policies for open access," said panelist David Irwin, principal partner of Irwin, Campbell and Tannenwald, a law firm representing rural independent telephone companies.

FCC Urged to Act

As industry officials call on the FCC to make a decision--any decision--one commissioner defends the organization. Regulating new technologies such as broadband access is like walking a tightrope, he says.

"It has to do with the tension between technology and law," said FCC Commissioner Harold Furchtgott-Roth. "It's very appealing to say, 'Here's a place where the law is unclear and the technology is new, so let's be hands-off.'"

Analyst Crandall urges a free-market approach, especially while broadband technology is new. Consumers will lose out if regulation stifles broadband development, he says. (See "Broadband Is Coming at High Speed.")

"This is an area that is evolving very rapidly," he says. "The best solution is for regulators to stand aside."

For the FCC to emerge from the regulatory battle with credibility, commissioners must face up to the Internet economy, panelist Irwin said.

"Regulators are out of touch," he said. "I don't care what they say. They're out of touch."