FCC Classification Seen Spurring BPL Investments, Deployments

The order “removes the uncertainty that might have existed had that [classification] been an open question,” said Brett Kilbourne, regulatory dir. of the United Power Line Council (UPLC), which had sought the declaratory ruling. “By virtue of removing that uncertainty, that certainly encourages investment and encourages utility companies to deploy BPL.” But regulatory clarity from states and resolution of standards issues are also needed, he said.

Comr. Copps said there was no doubt BPL would be classified an information service given FCC decisions on cable modem and DSL, but “we are nowhere near finished defining what being an information service actually means.” The Commission’s BPL decision doesn’t provide any certainty on “difficult questions” relating to cross-subsidization and pole attachments, he said, describing them as “issues that sound pretty dry and technical -- but issues that come back to bite both consumers paying bills and entrepreneurs trying to devise business plans.”

The industry didn’t ask the FCC to go into issues like cross-subsidization and pole attachments, said Kilbourne. “I think the FCC did the right thing in not going into those issues at this time. To the extent that they become issues then we will bring that to the FCC’s attention.” The FCC would be overstepping its authority if it seeks to regulate utility cross-subsidization, said an industry official. Telco cross-subsidization issues are regulated at the state and federal level, he said, but with BPL “you are talking about infrastructure that is exclusively in the state’s jurisdiction.”

Quoting FCC statistics, Chmn. Martin said BPL subscriber numbers had grown 200% in 2005. “These services hold great promise for consumers,” he said. Terming the FCC’s legal approach “not my preferred option,” Comr. Adelstein said his concern with reclassification was that it “takes the Commission outside the ambit of those core legal protections and ground afforded by Congress.” McDowell didn’t say why he abstained. USTelecom hailed the decision as a “very good step” for consumers. Pres. Walter McCormick said the ruling shows that in an “already highly competitive marketplace, there is no need for outdated and unnecessary regulation.” The FCC’s decision provides regulatory certainty to an industry that has potential to bring additional competition to broadband, said Thomas Lenard of Progress & Freedom Foundation. Investors and utilities can now make BPL decisions based on market rather than regulatory considerations, he said.

The FCC action was “critical” to relieving BPL providers of concerns about net neutrality, said analyst Scott Cleland: “It’s an important recognition of inter-modal competition, and that intramodal regulation like net neutrality is inappropriate.” The BPL industry has overcome questions of financial and technical feasibility, and now regulatory issues have been taken care of, he said: “The remaining question is what’s the business model and will risk-averse utilities take risks.” He said he doesn’t see state regulation holding back utility deployments. Utilities have been slow on BPL deployments because they don’t perceive themselves as telecom providers, said Naqi Jaffery of Telecom Trends International. But lifting regulatory barriers can only give them an additional incentive to get involved in BPL, he said. Another factor that would drive utilities to BPL is competitive pressures arising from electricity deregulation, he added.