HILL SPEAKERS SAY MAJOR RURAL BROADBAND LAW CHANGES AREN'T NEEDED

Wilson, at congressional speakers breakfast at NARUC winter committee meetings in Washington Wed., said competitive forces generally were moving infrastructure forward, albeit slowly. She noted a recent FCC report that concluded broadband was moving ahead in a reasonable and timely manner: “Competition works and it is happening, not just between companies but also among technologies.” But competition alone won’t bring advanced infrastructure to far rural areas, she said: “It’s the universal service fund that will bring broadband to rural communities.” She also said digital divide was “closing faster than a flash flood,” with computer and Internet use growing fastest among low-income households. She said digital divide was going from class- based to generation-based situation.

Wilson urged govt. agencies to “take the toll booth off of public lands.” She said high access fees for rights-of- way through public lands were hidden tax on consumers: “Fiber shouldn’t be viewed as a cash cow for federal, state or local governments.” Instead it should be viewed as an economic engine: “Access to high-speed telecom services creates jobs that otherwise wouldn’t exist, but if your community doesn’t have these facilities, employers simply won’t locate there.” Wilson called for better allocation of scarce wireless spectrum to ensure advanced wireless services could be viable competitors to advanced wireline service.

Rep. DeFazio (D-Ore.) said Telecom Act generally hadn’t met promises of its supporters. Instead of more choice, he said, nation’s 4 largest incumbent telcos now controlled 84% of access lines instead of 48%, and instead of lower rates, average local phone rate now was 17% higher than in 1996. Instead of improved quality, average volume of service complaints has doubled and Bell companies have paid more than $2 billion in service quality fines, DeFazio said: “There are islands of competition where things are working, but that’s thanks to regulators, not competition.” Most of successful regulation has been from states, not FCC, he said, and FCC Chmn. Powell was “drunk on the Kool-Aid of competition.”

DeFazio said there needed to be balance between regulation and competition. In 1970s, he said, pendulum swung in regulatory direction “to the point of absurdity.” Now pendulum has swung too far toward deregulation, producing debacles like Enron, which DeFazio attributed not to energy market failures but to deregulation of derivative commodities trading. He said appropriate balance between regulation and competition could have regulators address structures of utility industries and make rules to ensure that markets had unbiased information they needed to make informed purchase and investment decisions. That approach is opposite to that taken by supporters of Tauzin-Dingell legislation, “which would give the Bell companies what they want without any obligations in return.”

States’ concerns over Tauzin-Dingell were aired at NARUC news conference later in day, where association and leading individual state regulators urged House to defeat bill in crucial Feb. 27 vote. NARUC Pres. William Nugent of Me. PUC reiterated group’s opposition to bill, saying it would deny broadband-using public protections of state and federal regulation, undermine Sec. 271 and state oversight of voice services and engender new flood of litigation over precise meanings of bill language, all without actually providing any new incentives to Bell companies for broadband deployment. He said Tauzin-Dingell would work to retard broadband development by concentrating market power into tight oligopoly. He said states wanted to create environment in which carriers could use their talents to earn profits in marketplace and weren’t envious of their resulting earnings, “but to eliminate competition so RBOCs can earn supranormal profits is offensive.”

Regulators from major states agreed bill was bad news for phone customers. Cal. PUC Pres. Loretta Lynch said it would prohibit PUC from hearing broadband cramming complaints such as those currently pending against Pacific Bell’s DSL services. Ga. PSC Comr. Stan Wise, NARUC 2nd Vp, said bill would be “death knell” to competitive broadband investment. Marilyn Showalter, chmn. of Wash. Utilities & Transportation Commission, said Tauzin-Dingell would “reward those carriers that have kept their local networks closed to competition while punishing those who've opened their networks, and offer no positive incentives to expend DSL.”

Comr. John Burke of Vt. Public Service Board said bill would blunt all other potential regulatory tools that could be used to promote broadband deployment and negate entirely his board’s Sec. 271 proceedings. Mich. PSC Comr. Robert Nelson, vice chmn. of NARUC Telecom Committee, said Mich. experience showed only way to drive down prices, encourage investment and improve service was to encourage and facilitate competitive entry. He said market forces at present were working slowly, but they couldn’t be speeded up by eliminating competition, as Tauzin-Dingell would do.

Reacting to harsh stance by NARUC and states against Tauzin-Dingell (HR-1542), SBC said NARUC had failed to consider all facts. SBC said current regulatory framework wasn’t working for broadband, and bill would give U.S. economy “much-needed shot in the arm” by clearing up patchwork of regulations, which in turn would unleash investments in broadband infrastructure. SBC said that under Tauzin-Dingell, it still would be subject to market-opening requirements, providing competitors with network access and wholesale service quality standards and under specific timetable for broadband deployment in rural and underserved communities. Carrier said NARUC’s concerns about Tauzin- Dingell also “ignore the fact that cable with its 70% share of the broadband market is unregulated.” SBC said bill’s “realistic, market-based broadband regulatory framework” would ensure prompt access to broadband at competitive prices.

In other NARUC developments, board of directors approved all 6 telecom resolutions from Telecom and Consumer Affairs Committees. Only change was to amend resolution calling for separate rural communications policy bureau within reorganized FCC. Resolution was amended to call for some sort of office or division within FCC with staff that would deal only in rural telecom issues and answer to FCC’s commissioners.