August 5, 2005

US FCC eases regulations on DSL broadband

By Jeremy Pelofsky

WASHINGTON (Reuters) - Verizon Communications and
other U.S. local telephone companies will be freed from
numerous regulations on their high-speed Internet services, the
U.S. Federal Communications Commission decided on Friday.

The agency unanimously agreed to treat the service, known
as digital subscriber line (DSL), as an "information service,"
which insulates it from many traditional telephone rules, such
as requirements to lease network access to competitors.

The designation would allow the big local telephone
companies, called the Baby Bells, to cut off or potentially
negotiate new terms for Internet service providers such as
EarthLink Inc. to use their networks for broadband.

The United States has fallen to 16th in world rankings of
broadband deployment per capita, leading Republican FCC
Chairman Kevin Martin to make rolling out high-speed Internet
service to consumers a top priority.

Cable and telephone carriers are battling to provide
customers with a suite of broadband services, like fast
Internet access, video and voice service, already serving about
37.5 million customers.

The FCC's decision came after several days of intense
negotiations among commissioners.

Because there is a vacant Republican seat on the five-
member FCC, Martin had to convince at least one of the agency's
two Democrats to agree to the new DSL designation.

Martin has been trying to equalize the rules for DSL
providers and cable companies such as Comcast Corp.
The decision follows a Supreme Court ruling that backed the
FCC's ruling to label cable broadband an information service.

Verizon and SBC Communications Inc. , the two
biggest local telephone carriers, have complained they are at a
disadvantage in competing against the cable operators because
their service has been subject to stricter rules.

DSL is seen as attractive because it is cheaper, but it
offers slower data download speeds than cable service. There
are roughly 15.5 million DSL lines in use, compared with close
to 22 million customers who get broadband from cable companies.

The commissioners decided to require DSL providers to
continue for nine months to pay into the universal service fund
(USF), which subsidizes communications services in certain
cases, unless a new funding system is developed sooner.

The ruling also provides a one-year transition period for
independent Internet service providers and the Bells to
negotiate access agreements for existing customers.