TELECOM REFORM HITS SNAG

TELECOM POLICY REFORM IN Washington this fall took a sudden turn in the direction of deep quagmire as House backers of new pro-Bell legislation stirred howls of protest across a wide spectrum of affected parties, including some who had been supportive of earlier legislative efforts.

Democrats on the House Energy and Commerce Committee hit the roof when committee chairman Joe Barton (R-Texas) brought out a revised version of an earlier draft bill that went much further toward serving Bell companies interests than before. At a Nov. 9 hearing on the measure, Democrats noted the draft would put key Telecom Act provisions governing cable-telco mergers and other activities under the rulemaking powers of the FCC and charged the new measure would accord more freedom to the Bell companies to restrict competition.

Ranking minority committee member Rep. John Dingell (D-Mich.) said, based on his reading of the new draft, all the work the Republican and Democratic committee leadership had done to craft the first draft in a spirit of bipartisanship has vanished into a black hole. Dingell charged the committee majority with making changes from the first draft that strongly favor one group of stakeholders, namely, the telephone companies, over others.

Even Barton acknowledged that his earlier expectations for swift passage of a bipartisan telecom reform act were no longer realistic. Instead, he expressed hope that a bill could at least be finalized by the subcommittee on telecommunications before the end of 2005. Meanwhile, in the Senate, a far-reaching telecom reform measure introduced last summer by Sen. John Ensign (R-Nev.) has been set aside in the Commerce, Science and Transportation Committee pending a series of hearings on telecom issues that have been scheduled for this quarter.

Representing COMPTEL and XO Communications Inc. at the Nov. 9 House hearing on Bartons bill, XO COO Wayne Rehberger came down hard on the measure, charging it would create gatekeepers for the Internet with negative consequences that would ripple through all segments of our information economy. By only requiring that facilities-based providers of broadband Internet transmission service, or BITS, to interconnect or exchange traffic with other BITS providers and telecommunications carriers, the bill would leave everyone else including Internet portals, content suppliers and companies like XO with no assurance of access to end users, Rehberger said.

In an analysis of the proposed legislation, COMPTEL noted while the bill would preserve a telecommunications carriers rights with respect to unbundled network elements (UNEs) and colocation, the definition of telecommunications carriers only covers providers of circuit-switched services, excluding all next-generation packet-based telecommunications services. The loss of UNEs for providing last-mile access for packet services reflects a policy decision that monopoly/duopoly in the last mile is the preferred outcome, COMPTEL claimed in its analysis.

While the draft bill carries so-called Net neutrality provisions that bar BITS providers from blocking, impairing or interfering with the offering of, access to or the use of such content, applications or services, the absence of interconnection requirements for nonfacilities-based providers or UNE access requirements for packet-based communications providers means the bill would do nothing to prevent incumbent network operators from acting as gatekeepers, Rehberger said.

Moreover, by allowing BITS providers to implement enhanced QoS for their own video and premium broadband services so long as such services dont unreasonably impair or interfere with access to lawful content, applications and services provided over the Internet, the draft would eviscerate the consumer protections purportedly provided in section 104(a), he said.

The Net neutrality debate intensified in the fall when Edward Whitacre, CEO of what is now AT&T, was quoted in Business Week on the question of whether SBC Communications would charge Internet interests for access to its networks. Theres going to have to be some mechanism for these people who use these pipes to pay for the portion theyre using, Whitacre said. For a Google or Yahoo! [Inc.] or Vonage [Holdings Corp.] or anybody to expect to use these pipes free is nuts.

SBC officials say Whitacre was referring to the companys plans to charge content suppliers for the QoS, bandwidth assurances, prioritization and other enhanced mechanisms available through the LightSpeed network that would provide users a better than best-effort experience. It would be senseless for us to degrade the broadband experience for our users when we have competitors who are offering high-bandwidth broadband services, says Jeff Weber, vice president for product and strategy for the new AT&T, in an interview with PHONE+.

The pipe has gotten much bigger, which means the user experience over best-effort broadband will be better, not worse with Project Lightspeed, Weber adds. But its important to recognize the Internet is best-effort today, and it will be tomorrow, which is different from the managed network were creating with Project Lightspeed.

Left unanswered is the question of how the allocation of significant network capacity for quality-assured services, including bandwidth-consuming IPTV, will affect the capacity thats leftover for best-effort broadband. Today, all the IP-based capacity for consumer services is used on a firstcome, first-served basis by packets flowing through the pipe. If that capacity is squeezed by allocations of IP capacity to higher-quality services, best- effort in the new environment could be affected significantly.

While SBC/AT&T hasnt provided specific clarification on this issue, officials say the capacity expansion for IP traffic across metro backbones as well as through access lines ensures the best-effort capacity component will be unaffected.

Internet interests weighing in on the draft legislation made clear they were not satisfied by such assurances. In a letter to the committee, Internet companies, including Google, Amazon.com Inc. and eBay Inc., said imposing different rules on IP video as opposed to Internet services could lead to discrimination against Web-based content. The draft measure says only companies offering standard broadband Internet services would be subject to Internet neutrality rules; broadband video services would not.

The new draft also would subject present ownership restrictions such as barriers to mergers between cable and telephone companies in the same market to FCC review and possible elimination. This last provision was a terrible policy decision, said Rep. Ed Markey (D-Mass.), the ranking minority member on the subcommittee, during the Nov. 9 hearing. Overall, he added, the changes represent abandonment of a promising path for what I see as a detour to a likely legislative deadend.

Representatives of incumbent telcos praised the new draft measure. Walter McCormick Jr., CEO of USTelecom, says it will help spur new investment, job growth and increased consumer communications and entertainment choices.

Cable interests, which had withheld substantive comment on the previous draft, came out against the new draft. Testifying on behalf of the National Cable & Telecommunications Association, Insight Communications CEO Michael Willner asserted the current draft creates different regulatory regimes for like services. … Like services should be treated alike and all providers of those services should play by the same rules, he said.

SBC/AT&T general counsel James Ellis argued cable operators have not had to play by telecom rules while telcos have had to abide by cable regulations. Telecom carriers, he said, must provide services such as unbundling and colocation, while cable providers do not have to provide similar concessions to smaller market players.

Marilyn Praisner, a member of the Montgomery County Council in Maryland and representing the National Association of Telecommunications Officers and Advisors, said the bill was tilted heavily in favor of telcos. The telephone companies, to us, appear to get everything they ask for, including fast-track (video) franchising, while avoiding most social obligations, she said.