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8/5/2005
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FCC Eases Regulation Of DSL Lines

The upshot: ISPs are on their own, because phone companies no longer have to provide these rivals with low-cost access to their high-speed Internet lines.

Following the deregulatory lead of its new chairman, the Federal Communications Commission Friday voted to ease regulation of phone companies' high-speed DSL Internet access lines, a possible fatal blow to the independent Internet service businesses of providers like EarthLink.

By a unanimous 4-0 vote, the commissioners approved chairman Kevin Martin's plan to classify phone companies' broadband operations as an "information service," a legal move that absolves the phone companies from having to lease their lines to competitors at discounts. Large telcos like SBC and Verizon had complained that the previous laws, part of the 1996 Telecom Act, left them at a competitive disadvantage to cable companies, who were not required to share their networks in a similar manner.

Since the Supreme Court's recent ruling in the Brand X case -- which supported the FCC's decisions to keep cable services clear of phone-line regulation -- the FCC's Martin has been calling for equal treatment of phone companies' Internet broadband services, in both public appearances and in published articles.

While FCC chairmen usually have little trouble advancing their agendas -- since the politically divided agency typically has three members of the president's party and two of the opposition's -- Martin's commission is in a unique state of having one fewer commissioner than normal, due to the fact that the departure of former chairman Michael Powell in March left a Republican vacancy that has yet to be filled.

The debate over the DSL deregulation led to a one-day postponment of the FCC's monthly open meeting, where such items are typically voted on. Published reports said that certain sticking points -- including what level of compensation phone companies would continue to provide into the Universal Service Fund, and whether or not there would be safeguards against the blocking of independent services, like Voice over IP -- kept Martin from getting a majority before Thursday's meeting.

While the details of the order are forthcoming, it is believed that in return for their votes of approval, Democratic commissioners Jonathan Adelstein and Michael Copps were able to bargain for some of their concerns, including continuing contributions to the USF (which supports rural phone companies, among other programs) and protections for "network neutrality."

Large phone companies were quick to voice their approval, with press releases hitting the wire well in advance of the FCC's own official announcements.

"This is an important step toward a national broadband policy that allows consumers to enjoy the full benefits of competition," said Susanne A. Guyer, Verizon senior vice president for federal regulatory affairs, in a prepared statement. "At last, regulations are catching up to where consumers and technology have been for some time."

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