Broadband deregulation: Help or hindrance?

Maintaining competition is the only way to promote broadband communications and Internet access, say critics of bills to relax regulations on local phone companies, warning that the proposed legislation could stifle the technology and raise rates.

Giving the “Baby Bells” exclusive use of telephone infrastructure would make digital subscriber line prices skyrocket and stall development of future broadband technology, said panelists at a Senate committee meeting this week. Representative Edward Markey (D-Massachusetts) and Loretta Lynch, president of the California Public Utilities Commission, assailed the Tauzin-Dingell Bill, which the house passed in February, and the Breaux-Nickles Bill, introduced in the Senate earlier in May.

Representatives Billy Tauzin (R-Louisiana) and John Dingell (D-Michigan) argue that their bill, which would lift 1996 restrictions on the Bells, would foster competition by enabling the telcos to compete with cable providers and encourage them to improve broadband service. Under the bill introduced by Senators John Breaux (D-Louisiana) and Don Nickles (R-Oklahoma), the Bells would no longer have to share DSL equipment with competitors.

Following AT&T’s Lead?

The committee, chaired by Senator Ernest “Fritz” Hollings (D-North Carolina) gathered Wednesday to continue the long debate over why broadband is not taking off faster. While about 85 percent of U.S. homes have access to high-speed Internet services, only 10 to 12 percent subscribe to it, Hollings said in his opening statement. The chair expressed disapproval of both the Tauzin-Dingell Bill and the similar Breaux-Nickles Bill.

Spurring competition between phone companies put in place by the 1996 Telecommunications Act will lead to full deployment of broadband access, Markey said. The reason it’s not more widely adopted, he said, is because it costs as much as US$70 monthly. Only by allowing competition will the prices come down, Markey said.

Markey cited the 1984 breakup of AT&T Corp. as an example of services improving as a result of increased competition. Only when smaller long-distance companies were allowed to enter the market did AT&T invest in its long-distance infrastructure.

“Now, what forced them to do it?” Markey asked rhetorically. “It was, without question, the paranoia that someone else would deploy new technology first. Then the price of long distance plummeted.” He contends the same has been happening with broadband.

“Before 1996, no one had broadband,” Markey said. “Now, 75 to 85 percent of homes have broadband going down their street. Is that a crisis, or is that a remarkable event?” Markey urged the committee to not “pull the rug out from under” the smaller competitors. He predicts price hikes if the Bells were allowed to exclude competitors from using their lines, as both bills would permit.

Assessing the Field

Agreeing with Markey, California PUC president Lynch drew the example of California’s 1998 electricity deregulation debacle to claim a similar approach to DSL would stifle broadband deployment.

“Deregulation would provide a license to monopoly, or at best, duopoly,” Lynch said. “Tauzin-Dingell and Breaux-Nickles force states to give up their ability to regulate services that are essential to states’ economic well-being.” Those services include customer service, reasonable prices, and fair notice of disconnection, Lynch said.

Breaux defended his bill, saying it merely “takes the politics out” of the broadband debate. The Bells need DSL deregulated in order to compete effectively with other broadband platforms, he said. The bill creates “parity” among broadband services, whether telephone, cable, wireless, or satellite, Breaux added.

Hollings, however, countered by saying cable holds 70 percent of the broadband market and DSL has everything else. Breaux’s bill would effectively create a duopoly between cable and DSL services, Hollings said.

Also considered at the hearing was how to bring broadband access to the approximately 15 percent of the U.S. population, mostly rural, still lacking the service. Lynch, Markey and others praised a bill recently introduced by Hollings that would give tax credits and grants to rural regions so they could invest in the equipment.

“If there are impossible logistical things keeping us from deploying broadband in rural areas, let’s talk about it,” Markey said. “But let’s not take away from urban and suburban America a policy that’s already working.”

(Anne Ju writes for the Medill News Service, a PC World affiliate.)