In a potentially significant reversal of policy, the Federal Communications Commission could be poised to make the big telecoms share their high-speed Internet fiber networks with smaller companies. They would, in turn, offer more broadband services to the public. That's according to a Bloomberg story published on Friday, which adds that the proposal being considered comes from the Cbeyond broadband/telecom services firm. We contacted the FCC about this and got no response. But we also called AT&T, and they're taking it seriously enough.

"We support the Commission's efforts to promote investment to achieve universal broadband and create jobs in this difficult economy," an AT&T spokesperson told us, "however, the rule changes pushed by Cbeyond will undermine these efforts."

This would be big news if it's true. The Commission's National Broadband Plan coordinator, Blair Levin, has recently made statements unsympathetic to this idea. "We're not that terribly interesting [or interested, one presumes] in moving toward things that will just freeze capital investment and have long, drawn-out court battles," Levin told Amy Schatz of the Wall Street Journal in late December. "That doesn't strike me as that productive." And when the FCC announced that it had commissioned a study which explored the line-sharing question, Levin's public statement declared that "We don't want to reinvent the wheel."

Cashless stimuli

Would this constitute wheel reinvention? Not likely—but it would produce a very different-looking circular object. The FCC has taken a lot of criticism from public interest groups upset that its preliminary outline for its National Broadband Plan didn't deal with line sharing, among other issues. And Cbeyond's founder Jim Geiger has been campaigning for what he calls a "cashless stimulus" in the form of cheaper special access rates for smaller business broadband services providers.

Special access is telco jargon for what it costs these competitive carriers to connect to the big AT&T, Verizon, and Cox networks. Were these rates more affordable and the access better, Geiger argues, small businesses could rely more on cloud computing and Web conferencing. "The FCC should require the Bell monopolies to sell—at retail prices—the bandwidth necessary for competitors like Cbeyond to provide next-generation broadband applications to small businesses," Geiger says.

As already mentioned, Cbeyond has formally petitioned the Commission to make this move. "The FCC should adopt rules requiring incumbent LECs [Local Exchange Carriers] to provide unbundled access to the packetized bandwidth of hybrid loops, FTTH loops, and FTTC loops at retail rates," Cbeyond says.

Translations for civilians:

FTTH and Fiber-To-The-Cabinet connections—the closest last-mile lines you can get via optical fiber, which is the best kind of broadband line around

Hybrid connections—combo copper/fiber pipes.

In 2003, the agency relaxed rules requiring the big telcos to sell access to these kind of lines, leaving smaller competitors like Cbeyond to the mercy of inferior links like T-1 facilities or faster, but pricier DS3 loops.

The FCC argued that "excessive network unbundling requirements tend to undermine the incentives of both incumbent LECs and new entrants to invest in new facilities and deploy new technology. The effect of unbundling on investment incentives is particularly critical in the area of broadband." And so the agency ruled that incumbents did not have to offer unbundled access to newly rolled out fiber loops or to the packet-switching capabilities of hybrid loops.

But these policies, Cbeyond now argues in its petition, "have left small businesses to traipse a proverbial dirt path while a modem, three-lane highway is unused:"

Cbeyond is ready today to develop a series of applications for small businesses that are utilized almost exclusively by large businesses. These applications include virtualized desktops, remote desktop management, high-resolution video conferencing, broadcast/live video streaming, robust data protection, sophisticated video security systems, cloud computing and software as a service. These are proven applications that yield unquestioned efficiencies. Small businesses could rely on them to lower their costs and increase productivity. But Cbeyond cannot offer these applications via T-1 loops because the applications require much more bandwidth than 1.5 Mbps. Moreover, DS3 loops are too expensive to serve as a viable substitute. Cbeyonds needs the increased capacity that fiber and hybrid loops can provide in order to deliver the applications at issue.

So the company wants the FCC to launch a Notice of Proposed Rulemaking considering to what degree to reverse its 2003 rules on fiber sharing. Cbeyond's petition relies heavily on the conclusions of that aforementioned study conducted by Harvard University's Berkman Center for Internet and Society. Berkman's comparative survey of the broadband speeds and prices consumers enjoy around the world found that "the lowest prices and highest speeds are almost all offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, though use of open access facilities."

Impermissables

Rest assured, to whatever degree the FCC moves in this direction, said actions will be fiercely opposed by the big telcos. They repeatedly took even mildly procompetition line sharing rules to court up until the deregulatory order of 2003. The Telecommunications Industry Association has choice words for Cbeyond's petition in a commentary filed with the FCC in late January, calling it "impermissibly based on a specific business plan contemplated by Cbeyond itself."

"Contrary to the Petition’s claims, investment in fiber networks has skyrocketed as a result," of deregulation, argues the trade group. "Broadband providers spend tens of billions of dollars in capital expenditures each year to deploy and upgrade their networks." As for the Berkman Study, the telcos are on record as calling it a dog, or an "embarrassingly slanted econometric analysis that violates professional statistical standards and is insufficiently reliable to provide meaningful guidance," in AT&T's words.

The FCC's line-sharing policies have had "the effect of promoting massive investment in advanced broadband facilities and spurring ever more robust intermodal competition," advised Verizon in its response to the Cbeyond petition, which "gives no basis to disrupt this successful policy."

Apparently somebody at the Commission thinks otherwise. Now everyone's waiting for the next shoe to drop.