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The Honolulu Advertiser
Posted on: Saturday, August 6, 2005

FCC says telecoms can restrict access to Internet lines

By Arshad Mohammed
Washington Post

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WASHINGTON — The Federal Communications Commission ruled yesterday that big telephone companies no longer have to lease their high-speed Internet lines to competitors, giving the companies more power over the delivery of popular fast Internet services.

The new policy raises the possibility that America Online Inc., Earthlink Inc. and countless smaller providers that do not have their own networks could ultimately lose use of digital subscriber lines, or DSL, or have to pay the telephone companies more to keep offering broadband Web access.

Combined with a recent Supreme Court decision that freed cable TV companies from having to share their networks with Internet providers, the FCC policy completes a rapid change in rules that have so far created a wide-open market with ever-shrinking prices for broadband services.

The panel agreed to delay imposing the rule for a year to lessen the impact on Internet service providers and their customers.

FCC Chairman Kevin Martin said it was only fair to give telephone companies the same treatment won by cable companies in the Supreme Court's June 27 "Brand X" decision, and he argued that consumers have multiple choices for broadband access.

"With the actions we take today, consumers will reap the benefits of increased Internet access competition and enjoy innovative, high-speed services at lower prices," he said.

At present, there is lively competition among multiple providers to lure customers with introductory broadband offers as low as $14.95 a month.

But critics say that if big cable and telephone companies are ultimately the only broadband players, they could raise prices over time.

Whether high-speed Internet prices ultimately rise or fall depends in part on the development of still other types of technology, such as the delivery of broadband over power lines, wireless networks and satellite-based systems.

"Those futuristic promises are just that — promises," said Kenneth DeGraff, policy director for Consumers Union.

"The FCC has solidified a mano-a-mano match between ... the cable and telephone companies," he said. "When consumers have fewer choices, prices will rise."

Industry officials and independent analysts said that the latest decision is likely to drive many small ISPs out of business but that bigger ones, such as Earthlink and AOL, would continue to be able to lease access to DSL lines from the telephone companies, albeit at higher rates.

Broadband has become the most popular way for Americans to access the Internet, and it is transforming the Web.

High-speed surfing makes possible many of the hottest aspects of Internet culture, such as downloading music for iPod portable players or watching streaming video from events such as this summer's Live8 concerts.

Broadband prices have gotten low enough to woo more than half of American home Internet subscribers and have led to the decline of old-fashioned dial-up service such as that offered by AOL and Earthlink.

Those companies are transforming themselves to keep up but lack their own high-speed networks and have depended on regulated access to systems owned by others to stay competitive.

In addition to representing a victory for the telephone companies, the FCC's bipartisan, 4-0 broadband vote is something of a coup for Martin, who brought along the commission's two Democrats by striking compromises.

Industry analysts said the Democrats were willing to cut a deal because the Brand X decision made it all but inevitable that the telephone companies would eventually get the same treatment as cable companies.

Among the compromises, the FCC postponed carrying out the broadband decision for one year to give independent ISPs time to adjust and to prevent their customers from being cut off overnight.