Martin Wavers on CLEC Issues; Carriers Pounce on Net Neutrality

Telecom relied extensively on competition within sectors around 1996, a major reason for many of the rules created at that time, Martin said. But between fear of stifling investment and a change toward competition among services like wireline, wireless and cable, Martin said, new rules won’t focus on bring more providers into a sector. Asked about high-speed last mile coverage, which many CLECs have found difficult to maintain through wireless alternatives, Martin said the Commission wants to “provide maximum incentive to invest in new infrastructure… including last mile.” He said the “question is still being played out” whether wireless is a true alternative carrier or an add-on to wired networks. When CompTel Pres. Earl Comstock noted 2 of the 4 major wireless carriers are owned by Bells, Martin said “there are still always 3 other wireless carriers” competing against the Bells and their affiliates.

Martin, a 2004 CompTel award recipient, fielded pointed questions about his commitment to competitive balance. He challenged CompTel members to frame 2 or 3 positions that are most pressing and worth FCC consideration, and told reporters he doesn’t want to adopt any rules simply in expectation of anticompetitive violations. He asked why the FCC would impose regulations on net neutrality, the related bit prioritization and the like “before there’s even a problem” and no complaints have been received.

Martin defended his recent decision not to rule on a Verizon forbearance petition, claiming it wouldn’t have any effect on CALEA, USF or CPNI-disabilities protections. The order focuses on the corporate market anyway, he said, and Congress is considering bills with broader protections for consumers.

Net neutrality questions are fairly straightforward, CompTel members told us, and don’t need further study. Net neutrality is a set of consumer protections defined in FCC rules, said John Sumpter, Pac-West vp-Regulatory. They come from traditional telephony, where clear govt. intervention, not “the Bells saying ‘You can trust us,'” was the reason for nondiscrimination rules, he said. On the digital side, the facts are in as well, Sumpter said: Voice transmission is very sensitive to delay but can tolerate “dropped bits left and right,” and data is the other way around. This means that “tiered pricing is natural,” he said, and VoIP prioritization “is important.” The problem arises when prioritization and tiering are discriminatory, he said. Any Bells that would put their voice bits at a higher priority than a competitor’s are violating the well-defined net neutrality rules, Sumpter said.

The regulatory debates in the forefront reflect a “loss of focus on the competitive side” of the industry since the 1996 Telecom Act, said XO Senior VP-Govt. Relations Heather Gold. “The sense was that the market rules but the dominance [of the Bells] is so insurmountable” checks are still needed, she said. Unless network neutrality provisions are enforced, there will be “someone gate-keeping… the Internet,” she said. An XO spokesman said rumors of a return to a per-usage fee for data use, if true, could cause extensive blocking of interconnected networks. For this reason, Gold said, govt. needs to make clear Bells have limited scope in controlling the flow of bits over the Internet.

Even those who agreed with Martin on the need for more study of neutrality voiced concern over abuses of network management. “There’s a lot of smoke” on the issue, Broadwing VP-Marketing and Pricing Donovan Dillon said. “Let’s isolate the self-interest, let’s isolate the politics, from the reality of the technology,” he said. He urged policy makers to clarify their stances so facilities-based carriers like Broadwing and CLECs know what they face. Universal service was a policy objective used as a legislative guideline for years, he said: “Do we need a similar set of principles to drive the net neutrality issue?” -- Ian Martinez

CompTel Conference Notes

Industry consolidation and assessment of the ‘96 Telecom Act will be the focus of the Judiciary Committee’s first hearings under a newly convened telecom task force, Chmn. Sensenbrenner (R-Wisc.) said in prepared remarks Sun. at the CompTel conference. “As long as I am chairman of the Judiciary committee, I will continue to forcefully assert its historic role in preserving and promoting competition in the telecom marketplace,” Sensenbrenner said in prepared remarks. He said he plans to scrutinize industry mergers to ensure there’s no risk of market abuse. The task force also will conduct hearings on intermodal competition, network neutrality, the impact of the Verizon v. Trinko court decision, interconnection and centrality of antitrust laws, the impact of state and local taxes on telecom competition and other topics.

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The Senate telecom bill will be an omnibus package including titles addressing franchising, universal service fund (USF), net neutrality and broadband deployment, Senate Commerce Committee Chmn. Stevens said late Mon. at the CompTel conference. A final draft is expected to be marked up after the Easter recess, Stevens said. The most divisive legislative issue is net neutrality, Stevens said, with some lawmakers arguing for no regulation while others -- particularly the younger, new committee members -- want assurance that content and service providers have nondiscriminatory service and access to the Internet. On the other hand, there’s strong “support and great unanimity” in including provisions to speed broadband deployment, Stevens said. “The largest barrier to broadband entry is the current franchising structure,” he said. Stevens predicted the committee would agree on franchising terms such as the percentage of revenue available to localities, whether there should be a uniform standard for the number of PEG channels and how to address public rights-of-way. The bill also will require that USF funds are used more efficiently and that there be transparency in the use of funds. One approach that committee members are considering is a random audit system that would apply not only to high-cost fund areas but also to the E-rate program, Stevens said. “To me and I think most members of our committee, this seems like a fair approach,” he said. Stevens said the House Commerce Committee Chmn. Barton (R-Tex.) “also has an interest in reforming USF,” and said the more steps taken to ensure the fund is efficient the better chance it has of surviving. Barton has said he would like to abolish the USF program but acknowledges that it’s not likely he would have political support.