FCC COMRS. SUPPORT STATE ROLE IN UNE-P, TELECOM COMPETITION

Several senators asked questions about what balance should exist between state and federal regulators. Powell said 1996 Telecom Act specifically gave local regulators jurisdiction in some areas, highlighting Secs. 251 and 252, but added that act did give deference to federal regulators when there was conflict. FCC Comrs. Abernathy, Copps and Adelstein also supported rights of state regulators. Mich. PUC Comr. Robert Nelson said UNE-P was needed until there was better transition into facilities-based competition.

While UNE-P and other telecom competition issues were expected to dominate hearing, several senators asked about media consolidation and broadcast issues. Sen. Wyden (D- Ore.) specifically expressed concerns about concentration, citing fears that “one company could own everything” in small communities. Wyden specifically cited rapid growth of Clear Channel Communications. Powell said any potential lifting of ownership caps wouldn’t be as “extreme” as reports suggested, and antitrust law could prevent some extreme cases. However, he also said he was “troubled” by Clear Channel case. FCC Comr. Copps said media ownership issues were sensitive because severe problems could emerge if Commission made wrong decisions and loosened regulations too much. “How do we put that genie back in the bottle?” he asked.

Commission had to consider seriously what impairments unbundled elements might create on telcos, citing direction given to FCC by federal appeals court rulings, Powell said. While he wouldn’t elaborate specifically on what actions FCC would take in “imminent” Triennial UNE Review, he stressed that proceeding wouldn’t curtail competition to extent that many portrayed. But he did stress that facilities-based competition was only competitive business model that had been shown to be effective, noting that many bankrupt CLECs were UNE-P based. Powell said broadband deployment was “central communications policy objective in America today” and driving investment was primary challenge to that goal. USTA Pres. Walter McCormick said he was encouraged that many senators focused on investment and economic improvement of telecom industry.

Powell highlighted his arguments in exchange with Sen. Dorgan (D-N.D.). While Powell stressed there were many means of competitive entry into local telecom services, Dorgan said that taking UNE-P off table would most effective entry point. But Powell said even without UNE-P, resale provisions in Telecom Act would give companies without facilities opportunity to compete. He also said long distance competition emerged through system more similar to resale provision in Telecom Act than UNE-P type system. CompTel Pres. Russell Frisby disagreed, saying long distance competition emerged through system that was very similar to UNE-P.

When incoming Committee Chmn. McCain (R-Ariz.) asked whether any changes were needed in Telecom Act, all 5 FCC commissioners. in attendance made few suggestions. Abernathy had no specific suggestions, while Commissioners. Martin and Adelstein cited need for tougher enforcement measures. Adelstein said Commission might need more enforcement authority for bankruptcy issues to help protect consumers and Copps said media consolidation issues might require some legislative clarifications. Many senators, on both sides of aisle, stressed their worries about how FCC actions could address consumers.

McCain also voiced concerns about cable rates. Powell said competition in multichannel services had increased, despite rising rates, saying 2 of 3 new multichannel subscribers chose satellite TV. He said competition in multichannel services would expand once telephone providers utilized video-over-DSL as new delivery platform.

Powell said biggest obstruction to telecom competition, including broadband, was “last mile” problem. “We need to encourage multiple pipes into the home to minimize this obstacle,” he said. Martin said FCC’s goal should be to create stable regulatory framework for deploying advanced services. Sen. Hollings (D-S.C.), who presided over hearing despite fact he’s outgoing committee chmn., said potential FCC action to restrict UNE-P would create broadband monopoly in small and medium business market and duopoly in residential markets. He said that as long as war was imminent, there wouldn’t be investment in broadband or other advanced services.

One alternative suggested by Sen. Allen (R-Va.), Senate Republican High-Tech Task Force chmn., was legislation he said he would introduce that would make more unlicenced spectrum available for Wi-Fi. Sen. Boxer (D-Cal.) was to co- sponsor bill, which she said would jump-start broadband deployment and promote innovation. However, Sen. Brownback (R-Kan.) queried Powell about Wi-Fi’s potential. Powell said Wi-Fi’s limited range meant widespread wire and cable deployment of broadband still was needed.

Sen. Burns (R-Mont.) said he would introduce broadband tax incentive bill that would help encourage rural deployment that would be similar to one he introduced with Sen. Rockefeller (D-W. Va.) in last Congress. However, this bill would feature Sen. Baucus (D-Mont.) as co-sponsor, and Burns said Baucus’s position as ranking member on Finance Committee gave him confidence measure could pass.