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FCC May Let Phone Companies Off DSL Hook
Forced Line Leasing To ISPs Would End

By Arshad Mohammed
Washington Post Staff Writer
Thursday, August 4, 2005

Members of the Federal Communications Commission worked yesterday to try to reach an agreement to free telephone companies from having to lease access to their high-speed lines to independent Internet service providers.

Sources close to the talks said the commission postponed today's open meeting until Friday to try to complete negotiations. Such an agreement would effectively extend to telephone companies the right won by cable companies under the Supreme Court's "Brand X" decision in June to bar rival Internet providers from their networks.

Consumer advocates said such a move could raise broadband prices and drive smaller Internet providers out of business. Under current law, telephone companies are required to offer access to their digital subscriber lines (DSL), which are increasingly popular for high-speed Internet access, to Internet service providers at regulated rates. Regional telephone giants such as Verizon Communications Inc, SBC Communications Inc. and BellSouth Corp. argue that they are now at a disadvantage to cable companies and should be freed from these obligations.

The five-member commission, which has one vacant seat, is split between two Republicans and two Democrats. That forces Republican Chairman Kevin J. Martin to secure at least one Democratic vote if he wants to get a quick agreement.

The Democrats would like to capitalize on the leverage they have before Martin gets a third Republican on the commission and can presumably shape the outcome to his liking, sources said.

Martin has said it is a priority to relieve the "Baby Bells," the remaining regional telephone companies created from the 1984 breakup of AT&T, of their historical obligation to allow others to lease access to their networks.

Among the issues on the table are whether to continue the old rules of guaranteed access and regulated prices for some period, giving ISPs such as EarthLink Inc. and America Online Inc. time to adjust. Others include guaranteeing "net neutrality" so that the regional phone companies could not bar access to any Web sites; ensuring law enforcement's ability to wiretap Internet phone services; preserving consumer privacy protections; and maintaining protections for people with disabilities.

Critics argue that ending the companies' "common carrier" obligations to lease their lines at regulated rates will allow them to raise prices they charge Earthlink and AOL and, in the worst case, to refuse to lease lines at all.

"Brand X stands for the proposition that a cable monopoly can decide who can use its network at what price and on what terms. To extend that principle to telephone networks would be compounding an enormous policy mistake," said Gene Kimmelman, public policy director of Consumers Union, the publisher of Consumer Reports magazine.

"This form of gatekeeper control either on cable or on telephone is synonymous with inflated prices," he added. "We are going to see a mass exodus from the market. It's going to be a two-player-dominated system."

One person close to the talks said the regional phone companies, which have a significant wholesale business selling DSL to Internet providers, were likely to raise prices but would not refuse access.

"You would have to be an extremely stupid Bell to summarily cut those customers off," said the source, who spoke on condition of anonymity because the FCC negotiations are ongoing. "After permitting you to do so, the FCC is going to be watching like a hawk to make sure nothing untoward is going on."

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