FCC issues new rules for local phone competition

Friday, August 22nd 2003, 12:00 am

By: News On 6

WASHINGTON (AP) _ Consumer and industry groups promise to challenge just-issued rules for telephone and Internet competition that give states new powers over local markets and give the regional Bell companies new rights to protect their high-speed, broadband lines.

The rules issued Thursday in a 576-page report allowed states to continue requiring the Bells to lease parts of their phone networks to competitors at wholesale prices.

But it also allowed companies that install high-speed fiber optic lines to keep them off-limits to Internet rivals. Companies that run high-speed DSL service over existing copper wires must open them to other Internet service providers.

Companies providing telephone and Internet service gave the rules a mixed review.

``Together with regulators, we will work to remove the barriers that deter competition in the local phone market, and we will consider appropriate avenues to reverse the unfortunate decision restricting competition in the broadband marketplace,'' said Wayne Huyard, president of MCI Mass Markets.

The Consumer Federation of America, an advocacy group, said it would ask the FCC to reconsider its rules on high-speed Internet access.

``Why shouldn't consumers of 21st century communications get the same benefits from competition that millions of wireline consumers already enjoy?'' Research Director Mark Cooper asked.

The local phone companies weren't happy with the FCC's decision to allow states to continue requiring them to lease part of their network at wholesale prices.

``It's unfair to Qwest customers that they continue to be forced to subsidize these giant corporations,'' said Steve Davis, Qwest Communications's senior vice president of public policy.

The rules were the result of contentious 3-2 votes in February. Chairman Michael Powell was on the losing end in the vote on phone competition, the first time he has been in the minority since taking over the five-member panel in 2001.

``There are some important achievements in this order that have long been objectives of mine _ namely substantial broadband relief,'' Powell said. ``Yet, regrettably, there are some fateful decisions as well that I believe represent poor policy and flout the law.''

Commissioner Michael Copps, one of the two Democrats on the five-member FCC and part of the three-member majority on phone competition, offered the opposite view.

``We preserve essential tools to foster voice competition,'' Copps said. ``The bad news is this decision plays fast and loose with the country's broadband future. Consumers, innovation, entrepreneurs and the Internet itself are going to suffer.''

The order gives states the right to continue requiring the former Bell companies to lease elements of their networks, such as lines and central office switching capabilities, to competitors at wholesale rates. To foster competition in residential service, companies such as AT&T and MCI enjoy low lease prices set by friendly state regulators.

In the face of evidence that competitors could provide their own switching, which routes calls from individual homes and businesses to the phone network, Powell would have phased out these low-cost leases in nine months.

But the final FCC order allows states to continue discounting switching leases, except when a market proves to be competitive by having either three competitors that provide their own equipment or two wholesalers that sell the service.