Fiction v Fact: Top 17 Fictions About the Broadband Internet

While other grassroots groups and lobbyists have given up the fight against the monopolies, one activist stands alone—refusing to ignore the current state of anti-competitive activities at work in the high-speed service arena.

Several key lawmakers, regulators, and communications chiefs celebrated the fifth anniversary of the Telecommunications Act of 1996 by declaring that all is well with advanced telecom services in the U.S. These statements could not be farther from the truth.

[Fiction] Cable-based high-speed Internet access spurred the Baby Bells (incumbent carriers) to hasten the deployment of digital subscriber lines access over ILEC infrastructures.

[Fact] It is far more likely that competitive DSL providers (DLECs), Competitive Local Exchange Companies (CLEC) and independent ISPs created the competitive environment for copper-based high-speed services, which motivated the Baby Bells to upgrade their systems.

[Fiction] ILECs have willingly cooperated directives from the Telecommunication Act of 1996 and the Federal Communications Commission’s orders regulating unbundled network elements and line sharing to free-up local loop access for CLECs, DLECs and ISPs to collocate DSL services in ILECs Central Offices.

[Fact] The Baby Bells have established red tape barriers and technological hurdles —to such an extent that a national DLEC, Covad Communications, was able to win a $37 million judgment against U.S. West in 1999 for failing to fulfill regulatory obligations.

[Fiction] The Telecom Act of 1996 has significantly opened local markets to create competition.

[Fact] As of February 8, 2001, ILECs still control 92 percent of local phone services.

[Fiction] After the Telecommunication Act of 1996 was made law the Baby Bells enthusiastically provided the same level of technical support and customer services to wholesale customers (CLECs, DLECs, and ISPs) as they have provided for their proprietary retail divisions and brands of high-speed services.

[Fact] Anecdotal evidence strongly suggests that ILECs have provided preferential treatment toward their proprietary retail divisions selling DSL services.

[Fiction] East Coast incumbent carrier, Verizon, denies that it issued a recommendation to ISPs demanding that they contract for OC-3 level connectivity—the equivalent to 84 T1 connections—in order to provision DSL access through the former Baby Bell.

[Fact] According to Frank Tower, NorthNet managing director, Verizon “suggested” that ISPs secure OC-3 connectivity because the ILEC knew few ISPs would be able to afford that large of a pipe, which comes with an equally hefty price tag. In effect, Verizon is attempting to run independent ISPs and CLECs out of the DSL marketplace.

[Fiction] Another ILEC, SBC, swears that its new DSL Marketing Agreement does not change the working relationship between it and ISPs, in regards to the independent providers’ DSL customers.

[Fact] SBC’s new DSL Marketing Agreement requires that ISPs allow the former Baby Bell to direct-bill independent provider’s end users. This is equivalent of requiring ISPs to turn over their customer base to SBC before they could provision a single digital subscriber line.

[Fiction] There are other competitive broadband platforms like wireless and satellite services that will compete with copper and coaxial high-speed technologies.

[Fact] Until spectrum caps and other regulatory barriers are eliminated, neither wireless nor satellite high-speed services can fulfill the vision of 3G wire-free access to the Internet.

[Fiction] The technological barriers to providing open or shared access to cable company infrastructures are overwhelming.

[Fact] The technology exists today, the only thing that does not exist is the motivation to implement shared access across cable systems.

[Fiction] The cable companies can’t make money by selling to unaffiliated ISPs at a wholesale rate.

[Fact] AOL Time Warner Inc. CEO Gerald Levin recently stated that the basic cost of providing high-speed cable services was about $12 a month, so the company could tap into a potent new revenue stream by selling wholesale access to independent ISPs like EarthLink, which has agreed to pay a wholesale rate of $24 to $27 per subscriber per month.

[Fiction] High-speed cable access is not a telecommunication service—it is an information service that should remain regulation-free.

[Fact] The U.S. Ninth Circuit Court ruled in AT&T v The City of Portland that high-speed Internet access is, indeed, a telecommunication service. [see AT&T Cable Wins Round Two]

[Fiction] Incumbent carriers contend that DSL is not a telecommunication service—it is an information service.

[Fact] The Telecommunication Act of 1996 considers DSL a telecommunication service and as such wholly regulated by the FCC.

[Fiction] The Baby Bells and cable companies will provide better, more competitive Internet services if they have few or no regulatory restrictions placed on them.

[Fact] With few or no regulatory conditions, incumbent carriers and cable companies will have monopolistic control over last-mile delivery systems and exert duopolistic control over high-speed Internet service in the U.S.

[Fiction] Without the FTC and the FCC Consent Orders, AOL Time Warner would have provided unaffiliated ISPs with fair terms and conditions for access.

[Fact] AOL Time Warner crafted an anti-competitive Term Sheet in August 2000, which would have prohibited independent ISPs from being able to afford access to AOL’s cable network.

[Fiction] National telecommunication policy does not need to include provisions protecting state and local rights to regulate telecom services.

[Fact] Without FCC and FTC provisions, both state and local regulatory agencies would lose control over their respective technological futures.

[Fiction] If AOL Time Warner has to provide access to multiple unaffiliated ISPs, it would stop spending money on infrastructure upgrades for the deployment of shared high-speed Internet services.

[Fact] AOL Time Warner recently announced that it has already upgraded 92 percent of its cable infrastructure in preparation for deploying two-way broadband Internet access.

[Fiction] The FCC’s “hands off” stance concerning cable access issues over the past two years has served in the nation’s best interest, allowing market forces to create competition among rival high-speed platforms.

[Fact] The FCC built local cable monopolies; so federal regulators are completely responsible for razing exclusive territorial boundaries prohibiting fair competition to provide high-speed cable services.

[Fiction] Independent ISPs just want a “free ride” through open access.

[Fact] Independent ISP owners and operators are willing to pay fair-market rates. The problem is that access has not been available at “any” rate. Only AOL Time Warner’s extortionate rates have been announced to date.

[Fiction] The FCC’s most recent spectrum auction, which was designed to allow small wireless services to compete with larger rivals, helped smaller wireless companies gain access to finite frequency resources.

[Fact] Analysts report that 90 percent of the bands auctioned were won by Cingular, AT&T Wireless, VoiceStream, and Sprint PCS, due in part to the nation’s top wireless providers forming “bidding partnerships” in order to guarantee the successful acquisition of this nation’s airwaves.

The actual state of the high-speed arena in the U.S. is anti-competitive, restrictive, and receiving a blind-eye view from the agencies that could work to open up competition in the market segment. It’s time for lawmakers and regulators to level the playing field among high-speed service providers large and small—be it copper-based or coaxial, wire-free or satellite fed—in order to fulfill the competitive promises written into the Telecommunications Act of 1996.

Author: Stephen Heins

News Service: ISP-Planet


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