FCC, Big Telcos Take Aim At Line Sharing Rules In Bid To Further Hamstring Broadband Competition

from the more-of-the-same dept

So you might recall that part of the Telecommunications Act of 1996 was the concept of line sharing, or local loop unbundling. Simply, the rules set forth by that law required that incumbent telcos needed to share their networks with smaller competitors, providing wholesale access to bandwidth. It was an effort to foster something vaguely resembling competition in the broadband space by letting smaller companies piggyback on existing network infrastructure. The thought was that because the barriers to market entry were so high, this could help smaller competitors gain footholds that would otherwise be impossible.

Unsurprisingly incumbent telcos utterly loathed this idea, and quickly got to work dismantling it. First by ensuring that the coordination between incumbent telcos (ILECs) and smaller competitors (CLECs) was as clunky, cumbersome and annoying as possible (something you probably noticed if you ever waited for installs from one of these smaller ISPs in the late 90s or early aughts), then by lobbying to have the rules dismantled. Incumbent telcos then used the resulting failure as evidence that the idea was doomed from the start, despite the fact we never truly gave it a chance.

The idea of opening incumbent networks to competitors is pretty common in some parts of the world. France for example managed to take the same concept and made it work quite successfully in cities like Paris, where to this day users can get TV, phone, and 100-500 Mbps broadband connections for a tiny fraction of what American consumers pay ($40 to $50 or so). A variation on this theme is open access, where multiple ISPs come in and compete over a core (sometimes government co-run) network; an idea that works well here and abroad, but also sees fierce incumbent ISP opposition for obvious reasons.

It's a battle incumbent telcos won handily thanks to lobbying power, but there remains a few lingering rules they're now trying to eliminate. As such, they've been petitioning the Ajit Pai FCC to eliminate the remainder of these rules. In a blog post by telco lobbying organization US Telecom, telcos argue that the rules are no longer necessary, and (much like their attacks on net neutrality) argue that eliminating them will drive "innovation and investment":

"This month, USTelecom is petitioning the FCC for nationwide forbearance from rules created in 1996 that no longer make sense in today’s marketplace. Specifically, the petition focuses on unbundling obligations, which require some ILECs (incumbent local exchange carriers, a.k.a. local telephone companies) to sell access to parts of their networks to certain competitors at extremely low rates set by regulators. These outdated rules distort competition and investment decisions. When outdated and overly restrictive regulations are rolled back, innovation and investment thrives. And for over two decades, the broadband industry has transformed how the world communicates under a light-touch regulatory structure that spurred over one and a half trillion dollars in private investment."

Unsurprisingly the smaller companies that are still using those lines don't see the rules in the same light. Independent California ISP Sonic, for example, is one of the last surviving independent ISPs from that era. Sonic argues that they still need access to these networks as they slowly work to build out a fiber network of their own, and gutting the remaining rules is simply an attempt to further constrain what passes for competition in American broadband markets:

"Sonic is fully engaged in the process of building fiber to customers in a number of markets around Northern California, but this represents a serious impediment to our ability to deploy fiber," says Sonic CEO Dane Jasper of the group's petition. "The 1996 Telecommunications Act created competition in the telephone and broadband marketplace by requiring incumbents to unbundle essential last mile facilities, primarily copper wires that go to premises," Jasper says. "Serving customers on these facilities is an essential step toward fiber deployment, which Sonic is actively engaged in." "However, we cannot lose access to copper in the meantime," Jasper said. "The cut-off of unbundled network elements as contemplated by US Telecom is an audacious attempt at limiting new fiber deployment by competitive carriers including Sonic, and it would directly harm hundreds of thousands of California consumers and businesses who we currently provide high-speed services using UNE copper facilities and backhaul."

The EFF also has a good blog post explaining why these rules are still important:

"While copper wire infrastructure may strike people as the infrastructure of yesterday, its existence and the legal rights to access it remain essential for competitive entry into the high-speed broadband market. This is because it is one of the only remaining ways a new company can gain customers to then leverage to finance fiber optic deployment. Should the FCC grant the petition, the growing monopolization of high-speed broadband above 25 Mbps where more than half of Americans have only one choice will likely become worse."

And while this isn't a story that's going to get much (any) real attention in the midst of so many other pressing issues, it's important all the same. Especially for a broadband market that's actually getting less competitive than ever thanks to these same telcos routinely refusing to upgrade their own networks, providing giant cable companies like Comcast a growing monopoly over an already uncompetitive broadband sector.

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Filed Under: broadband, competition, fcc, line sharing, open access