FCC changes rules on high-speed Internet services

WASHINGTON — Beginning in about a year, phone companies won’t have to lease their high-speed lines to competing Internet service providers at government-set rates, the Federal Communications Commission decided Friday.

FCC Chairman Kevin Martin said the unanimous vote by the agency’s four commissioners “ends the regulatory inequities that currently exist between cable and telephone companies” providing broadband Internet services.

Without guaranteed access at government-mandated rates, providers of digital service, or DSL, on lines now leased from the big regional Bells or smaller phone companies will have to negotiate with them over rates and access.

Consumer advocates criticized the deregulation — which will take effect after a one-year transition period — contending it will lead to fewer choices and higher prices for consumers by forcing existing independent broadband providers out of the market.

“What it means is you’ve got two players, two big market players — cable and telephone companies — controlling right now the primary two types of broadband service into the home,” said Jeannine Kenney, senior policy analyst for Consumers Union, the publisher of Consumer Reports magazine.

She said consumers may soon be forced into longer-term contracts and arrangements where they have to buy additional services to get high-speed Internet.

However, Tom Tauke, Verizon’s executive vice president, said the deregulation “will be very smooth and consumers will not notice except that over time they will have more services and better value.”

Earthlink Inc., which now provides service on leased lines, said it hopes to extend its current network sharing agreements with phone companies and does not expect to get bumped or priced off the lines.

“We drive subscribers to their network, so they have a vested interest in keeping reasonable market prices,” said Dave Baker, Earthlink Inc.’s vice president for law and public policy.

Indeed, the ruling’s early impact on the market may be somewhat negligible to all but some smaller DSL service providers.

The vast majority of the nation’s nearly 16 million DSL users buy that service directly from the four Bells: SBC Communications Inc., Verizon, BellSouth Corp., and Qwest Communications International Inc.

The biggest non-Bell providers of DSL service, Covad Communications Group, Inc., had already agreed to commercial leasing contracts with three of the four Bells. Earthlink, for example, buys much of its network access through Covad.

The FCC order follows a Supreme Court ruling in June that upheld the commission’s authority to free cable companies offering broadband from the same regulations that phone companies have faced.

Two Democrats on the commission fought for other points in the ruling, including continued help for rural Internet access, a homeland security provision to help law enforcement and protection for the disabled.

The FCC ruling reclassified DSL as an information service rather than the more regulated telecommunications service. For the time being, phone companies will have to continue making contributions to Universal Service Fund that subsidizes both phone and Internet services in rural areas. The FCC said that could change in nine months, but the fund will be maintained.