Posted on: Tuesday, September 2, 2003
Rules worry small Net firms
By Sean Hao
Advertiser Staff Writer
Local communications companies and industry regulators continue to wade through 576 pages of new rules issued late last month by the Federal Communications Commission that are expected to shape the landscape for broadband Internet and telephone services.
While the implications of the changes to telecommunications laws won't be fully known for a while, critics contend the rules will lead to less competition for phone and high-speed Internet services, and ultimately mean higher prices for consumers.
Local phone companies are still required to sell the use of their phone lines at discounted rates to long-distance companies and others.
Smaller Internet service providers such as LavaNet can continue to use existing copper-based Verizon lines to provide their own high-speed Internet services, such as digital subscriber lines. But they aren't guaranteed access to faster lines to the home that Verizon might build in the future.
LavaNet said the changes won't hurt its business today, but they could lock out competition and cost consumers in the long-run.
"Basically, everybody is unhappy with some portion of" the new rules, said Robert Brewer, a senior administrator at LavaNet. "If this goes forward, and Verizon lays fiber to every home, we wouldn't be able to provide service on that line.
"LavaNet's position is we think competition in broadband is important and really helps residents and businesses," Brewer said. "It's a concern long-term."
The new rules are designed in part to resuscitate the struggling telecommunications industry by making phone companies feel more confident in their ability to recoup large investments needed to build-out high-speed networks to the home. While many businesses have fiber-optic links to the Internet, few homes are wired for fiber.
The build-out of high-speed networks to cover the so-called "last mile" to homes would foster the roll-out of new services by telephone companies, including higher-speed Internet services and even video, though that could be several years away, said Daryl Schoolar, a communications analyst with Instat/MDR.
Though Verizon won't be forced to open new portions of its data network to competitors, it might do so anyway as a means of building subscribers, he said. "It could be to Verizon's benefit to do so," Schoolar said.
In addition to allowing regional phone companies to close off parts of its new data networks to competitors, the FCC upheld the rights of competitors to continue to lease older, non-fiber-optic phone lines at discounted rates. However, in doing so, the FCC gave state regulators increased powers to decide whether enough competition exists to allow local phone companies to close off those lines to competitors.
Last week, Verizon asked a court to overturn the FCC on that issue. Verizon and other regional phone companies wanted a quick end to the leasing, while most state regulators support the arrangement.
The new rules give state regulators 90 days to make a decision on leasing. The Hawai'i Public Utilities Commission said it's still deciding what to do.
"We haven't taken any final action yet, but we're working with other state commissions," said Kris Nakagawa, chief legal counsel for the PUC. "We're still trying to figure out what the FCC is telling us."
Reach Sean Hao at firstname.lastname@example.org or 525-8093.