The Other Shoe Drops after Brand X-The Deregulation of DSL Services
In an Order and Notice of Proposed Rulemaking (NPRM) adopted Aug. 5, 2005, FCC 05-150, the FCC ruled that providers of wireline broadband Internet access service, commonly delivered by digital subscriber line (DSL) technology, are not required to offer that wireline broadband transmission component separately to unaffiliated Internet service providers (ISPs). According to the news release, the Commission determined that wireline broadband Internet access (DSL) services are information services and not subject to Title II regulation, thereby lifting the regulatory regime in place for the previous 30 years. The Commission acted in the wake of the Supreme Court's recent Brand X decision, which found that cable operators have no statutory obligation to allow other ISPs to provide high speed broadband service through the cable operator's wires.
The Commission had previously classified facilities-based DSL service as a telecommunications service and required its providers—primarily the incumbent local exchange carriers (ILECs)—to offer their broadband transmission service separately from their Internet service and to offer broadband transmission as a stand-alone service on a common carrier basis. ILECs will now have the option of offering the transmission component of their DSL service to affiliated or unaffiliated ISPs either on a common carrier basis, a non-common carrier basis, or some combination of both. The Commission found that the " very different technological and market conditions" present today supported the lifting of the so-called "Computer Inquiry" requirements that were in place for 30 years.
To smooth the transition for ISPs and their customers, facilities-based wireline broadband Internet access providers must continue to provide existing wireline broadband Internet access transmission offerings to unaffiliated ISPs for one year, on a grandfathered basis. The ruling is a victory for ILECs who have claimed a competitive disadvantage based on the regulatory classification of their DSL transmission services. The decision is intended to put wireline broadband Internet access service on " an equal regulatory footing" with cable modem service and, as stated by Chairman Martin, " wireline broadband Internet access providers, like cable modem service providers, will be considered information services providers and will no longer be compelled by regulation to unbundle and separately tariff the underlying transmission component of their Internet access service."
The Commission appears ready to apply its Title I ancillary jurisdiction where it deems necessary. To ensure the stability of the universal service fund, the FCC will require facilities-based broadband providers to contribute to existing universal service mechanisms based on their current levels of reported revenues for DSL transmission for nine months after the effective date of the Order or until the Commission adopts new contribution rules, whichever occurs first. If the Commission cannot complete new contribution rules within the nine month period, it may extend that period or expand the contribution base.
Moreover, finding that the definition of "telecommunications carrier" in the Communications Assistance for Law Enforcement Act (CALEA) can encompass providers of services that are not classified as "telecommunications services" under the Communications Act, the Commission adopted a companion item that confirms that facilities-based broadband Internet access providers and "interconnected VoIP providers" (i.e., voice-over Internet protocol, or VoIP, providers that offer services permitting users to receive calls from, and place calls to, the public switched network) are subject to CALEA and must be able to accommodate law enforcement wiretaps within 18 months of the effective date of the Order.
The NPRM requested comment on whether the Commission should develop a framework for consumer protection in the broadband age regardless of the underlying technology. How the Commission will exercise its Title I jurisdiction to further certain social policy goals—such as homeland security, disability access, slamming, consumer privacy, universal service and Internet openness—may also be determined in that proceeding.
In a third companion piece, the FCC also issued a Policy Statement that outlines four principles to encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet. Those principles are:
(1) Consumers are entitled to access the lawful Internet content of their choice;
(2) Consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement;
(3) Consumers are entitled to connect their choice of legal devices that do not harm the network; and
(4) Consumers are entitled to competition among network providers, application and service providers, and content providers.
Although the Policy Statement does not have the force of law, the FCC intends to incorporate these principles into its ongoing policymaking activities.
The full texts of these documents have not yet been released, and the news releases lend no guidance as to what steps, if any, the FCC will take to ensure that these decisions do not negatively impact CLECs, in areas such as UNEs, interconnection, or special access.