PICKERING SEES NO BROADBAND LEGISLATION THIS YEAR
There’s not going to be broadband legislation this year so it’s up to FCC and state regulators to take action to assure competition, Rep. Pickering (R-Miss.) told American Enterprise Institute conference Tues. Although Tauzin- Dingell measure passed House, there are several “contradictory efforts” in Senate, Pickering said, including legislation sponsored by Senate Commerce Committee Chmn. Hollings (D-S.C.), bills by Sens. Breaux (D-La.) and Nickles (R-Okla.) which would give directives to the FCC, several bills that target broadband buildout requirements in underserved areas and initiative by Sen. McCain (R-Ariz.). “The likely outcome is nothing will happen… not out of wisdom but out of lack of consensus,” he said.
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That leaves job to FCC and state regulators to take whatever action is needed to encourage competition, Pickering said. However, before FCC considers deregulation, it should complete its first job -- assuring that Bell companies meet the Sec. 271 checklist, Pickering said. Current rules shouldn’t be changed “until all of the Bells meet the checklist,” he said. Then, whatever agency decides to do should include transition so competitors don’t get hit with dramatic change, he said. In addition, “with the legislation unable to pass, the regulatory role of the states will be very important,” he said.
Pickering said there was one area that definitely required legislation -- spectrum management. House Commerce Committee Chmn. Tauzin (R-La.) and Subcommittee Chmn. Upton (R-Mich.) are beginning to focus on spectrum reform and could move with proposal “if not this year, then next,” he said. Congress was interested in 3G issues until Sept. 11 terrorist attacks and DoD’s resulting concerns about giving up any spectrum “made moving ahead difficult,” Pickering said. He said he expected spectrum reform to get more favorable reception when Congress returned next year.
Earlier in day, AT&T Chmn. Michael Armstrong told AEI attendees that his company would be able to offer local service to more than half of Bell companies’ residential customers by end of year if state regulators continued to pursue procompetitive policies. He said AT&T was more hopeful lately because regulators in several key states had forced Bell companies to cut unbundled network element (UNE) rates, making it more economically feasible to offer competitive local service. State regulators, led by those in N.Y., have set “formula for success… that we need to replicate throughout the country,” he said. In Cal., for example, state regulators recently cut UNE rates more than 40%, Armstrong said. “If conditions remain as they are today, AT&T will be in the local residential market in California by the third quarter of this year,” he said.
However, Armstrong said his optimistic prediction wasn’t a given because only about 10 states so far had moved to more competitive policies. “The winds of change are still shifting,” he told audience: “We could easily return to the chilly days of the past.” He disputed arguments that UNE- based entry discouraged investment, saying UNE platforms were “essential first steps” that often were followed by facilities buildouts. AT&T has invested heavily in switches and fiber, he said. Armstrong also expressed concern about regulatory environment in Washington, where he said regulators and legislators seemed inclined to “buy into” Bells’ claims that they needed regulatory freedom to deploy DSL. He also questioned Bells’ campaign to get regulatory parity with cable companies, which are less regulated nationally than Bell companies. “If they really want parity with the cable companies, they'll need to be regulated by 30,000 different municipalities, just as cable is today,” Armstrong said.
ILEC officials took umbrage at Armstrong’s statements that using UNEs was key step in offering competition. “That’s a backwards way of thinking about competition,” said Verizon Senior Vp Edward Young. He said UNEs represented “synthetic competition,” which wasn’t what Telecom Act intended. Act envisioned facilities-based competition, Young said, questioning Armstrong’s view that UNEs were just first step toward establishing facilities-based services. AT&T built most of its facilities in N.Y. state before state regulators there even began their precedent-setting UNE proceeding, Young said. “Where UNE-P [platform] is heavily used, it replaces CLEC investment and perpetuates reliance on our networks,” he said. USTA spokeswoman said her association “welcomes” competition from AT&T because it indicated regulations on ILECs should be eliminated. “Unfortunately,” AT&T instead supports expanding regulation by applying outdated voice rules on emerging DSL service, “which we adamantly oppose,” she said. With cable controlling 70% of broadband market, local phone companies aren’t dominant providers of such services, she said.
On unrelated topic, Armstrong told reporters after his speech that company continued to be interested in distressed properties but hadn’t made any decisions on KPNQwest or Global Crossing. He said KPNQwest was “under study” but when asked about Global Crossing, he said he hadn’t received any recommendations from his staff on that one.