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Ben Charny


Jim Hu


The Federal Communications Commission on Thursday made more of the local phone companies’ high-speed fiber networks free from competition rules.

Telephone companies now don’t have to lease new fiber installations to competitors at all, the FCC decided. But, the regulators ruled, the companies must share any existing copper connections to homes or offices once they are upgraded to fiber.

SBC Communications, one of the nation’s four major local phone companies, or Baby Bells, applauded the decision. On Thursday, it said it now plans to build its fiber-optic network in half the time originally planned. “The shovel is in the ground, and we are ready to go,” SBC CEO Edward E. Whitacre Jr. said in a statement. “The path forward is much clearer.”

But the FCC decision also has drawn intense criticism. Opponents say the agency is strengthening the monopolylike hold of SBC, Verizon Communications, Qwest Communications and BellSouth.

“The Bell companies–with the support of the FCC–are quickly recapturing their monopoly,” said Jason Oxman, general counsel for the Association for Local Telecommunications Services. “The FCC has now immunized the Bell companies from competition for residential and small-business customers.”

The decision was one of two the FCC made Thursday involving broadband; the second sets rules for using the nation’s power grids to ferry high-speed Internet access. Although the United States is one of most technologically advanced countries, it ranks No. 11 in the world in terms of broadband penetration–“and may be slipping,” said FCC Commissioner Michael J. Copps.

“We don’t have a broadband game plan. I don’t know where ours is, but we’re late to the game,” Copps said at the FCC meeting. “There are consumers in other countries–Japan, Korea, Canada–getting magnitudes of more bandwidth at lower prices.”

FCC Chairman Michael Powell disagreed, saying, “We are doing this with a plan…and with great care.”

The ability to use power lines to access the Internet has been around for years. Because electricity travels at a lower frequency than Internet signals, the two can coexist on the same line without interference. Power lines are an attractive broadband delivery system because they are already in place and reach more homes than either cable systems or telephone lines.

The FCC began investigating the technology in late April. It found that the military, some public safety organizations and amateur radio operators claimed interference. To address those concerns, regulators on Thursday limited where power companies can put their network equipment, among other requirements.

More power to the power lines
Manufacturers and some broadband providers are already launching power line technology. Current Communications Group and Cinergy Broadband, a subsidiary of one of the Midwest’s largest utilities of the same name, are involved in a joint venture with a privately held start-up to provide Internet access directly to consumers through power sockets in their homes.

“We think the rules are a very good balance between giving protection of licensed radio systems while not restricting BPL technology,” said Jay Birnbaum, spokesman for broadband over power line (BPL) technology provider Current Communications. Current has a joint venture with power company Cinergy to provide BPL access in Cincinnati.

Internet service provider EarthLink recently tested a broadband service using power lines leased from Progress Energy, an electric company serving North and South Carolina and central Florida. The service was deployed in roughly 500 homes. An EarthLink spokesman said the companies are in the process of analyzing the tests and have made no further decisions about deployment.

Technical and market barriers still underlie BPL’s reality. The FCC has batted around the idea for many years, but has stalled in pushing these efforts into the market. Earlier trials, such as one sponsored by Nortel Networks in England, failed because of signal corruption.

Meanwhile, cable broadband and DSL services from the Baby Bells continue to gobble up the growing numbers of Americans upgrading to faster connections. These companies are bundling broadband access with video, voice, and in the case of the Bells, wireless.

“There’s the basic fact that you already have a duopoly in the market,” said Yankee Group analyst Patrick Mahoney. “Even if (BPL) is far superior, cable and DSL have a five- to seven-year market lead, which would be very hard to attack.”

State public utilities commissions have largely thrown their support behind broadband over power lines. The utility commissions have formed a working group to examine the technology and have echoed the FCC’s desire to introduce more competition against cable and the Bells.

“I can’ t imagine any state commissioner do anything but welcome it,” said Brad Ramsay, general counsel for the National Association of Regulatory and Utility Commissioners. “There are still some problems, but there is still some optimism.”