Nightmare on "F" Street. --- DC Circuit Disses Deregulation.

TAKE ACTION http://www.comptelaction.org/comptel/

 

We, customers who care about competition and the future of broadband, got bushwhacked, smeared, slapped in the face by the DC Circuit over something called the "Triennial Review".. Below are a few press releases from ALTS, COMPTEL, (important industry associations) SBC, QWEST (the phone companies) and statements by Powell, Martin, Copps and Adelstein (FCC Commissioners) --- (Thanks to the Ramsey Report.)

We're asking everyone reading this to write to the FCC to make sure that they appeal this decision to the Supreme Court.

Here’s the basic story.

During the end of summer, 2003, the FCC came out with a terrible decision commonly called the "Triennial Review". While many of you who are not up on the various aspects of the rules surrounding competition or broadband may not understand all of the intricacies, read our previous stuff on this:

How stupid was this Triennial decision? Well, the FCC decided that the Bell companies would no longer be required to offer "line-sharing", which allows DSL competitors to use a customer’s phoneline for DSL. And, any new upgraded networks would also be given to the Bell companies exclusively – even though customers have continually been funding network upgrades. On the competitive voice-services side, the opening of the networks would be determined by the states, not the FCC – so there’d be 50 rules.

Thus, let's kill off all wireline broadband competition, and maybe harm the voice competitors.So, of course, every competitive company appealed most of the laws, while the Bell companies also appealed the laws. The Bells want everything for themselves and not to share anything,

Now remember, the Telecommunications Act of 1996 was designed specifically to allow competition and open up the wireline Bell networks. Maybe the FCC should have read the Act.  

Now here comes the DC Court’s decision the first week in March, 2004, which essentially says – a) We agree line-sharing should go away and the Bells should own all upgraded networks and not have to open them to competitors and b) the Bells shouldn’t have to even open these networks to voice competitors offering local phone competition. How ironic that the Bells were allowed into long distance specifically because they promised to open their networks to competitors.

Though not unexpected, essentially this really, really, really bad decision allowed FCC Chairman Mike Powell to get an I-told-you-so because he was originally voted down in part of the Triennial vote because his position was even more severe than the majority. Now Powell writes:

"As a result, our citizens will enjoy the increased capabilities, innovation, and lower prices of advanced wireline broadband services for decades to come.... I dissented from the majority's decision on local telephone competition because it was inconsistent with the law and would result in years of regulatory uncertainty and unrealized consumer promise. Today, the court agreed and restored the opportunity to bring about new advanced services and true competition that will bring consumers choice and innovation."

But Powell's point of view was even that the Bells should own broadband and kill competition including all voice services, and so unless the Supreme Court overturns this decision, the American public will now have less choice, higher prices and no innovation.

As Reuters put it:

"A U.S. federal appeals court Tuesday handed a huge victory to Verizon Communications and other traditional local telephone companies, striking down rules that require them to share their networks with rivals at cut-rate prices."

Although the decision will be appealed, so we don't know how important it is at the moment, this decision is terrible for a number of reasons. While it may be overturned, there's no guarantee on that, and it is clear that this entire mess will not be settled, since the Supreme Court can remand it back to the FCC and have them do more work, etc.

And with Powell at the helm of the FCC, since he's in a "let them eat cake" mode, he may try to even block the FCC from appealing the decision.

Imagine being a Competitive DSL or voice competitor (CLEC) or Internet Service Provider (ISP) and needing capital. Who's going to want to invest with this much uncertainty. And from the deployment side of the equation, obviously the Bells, who keep telling us they're serious about rolling out broadband/fiber, will just say --"because of uncertainty, we ain’t doing a thing". So what if the Bell companies collected billions for fiber-optic based broadband and have pocketed the money with nothing to show for it.

While this is far from the end of the story, it makes the ISP and CLEC community have to push harder on that rock that is rolling down the hill against them.

But more to the point, Customers, we the people, really lose out. If these competitors are put out of business, we'll have less choices, we'll have inferior services, and the prices will go up.

In short, Darth Vadar and the Evil Empire celebrate, while the Rebel Alliance now ponders how to take down the Death Star.

Here’s some press releases, thanks to the Ramsey Report:

(2) CompTel/ASCENT Urges FCC Action Following D.C. Circuit Decision
BACKGROUND: Today the D.C. Circuit Court of Appeals issued its decision in the appeals of the Federal Communications Commission's Triennial Review Order. The following statement may be attributed to CompTel/ASCENT Alliance CEO H. Russell Frisby Jr.

"The D.C. Circuit's decision comes at a pivotal time in the development of
the competitive telecommunications market. Although it's taken almost eight
years, consumers are now finally reaping the rewards sowed by lawmakers who
supported the 1996 Telecom Act. Unfortunately, the D.C. Circuit's decision
turns back the clock to the days when monopoly control of the marketplace
gave consumers nothing more than poor service, high prices and little
choice. It is the ultimate responsibility of the FCC and states to protect
consumers, encourage economic development, and ensure that competition is
allowed to develop, rather than being quashed by a deregulated monopoly.

"Today a federal appeals court has usurped that responsibility. Unless the
FCC takes the necessary action and seeks Supreme Court review, we fear that
consumers and our nation's economy will bear the brunt of the court's
decision." # The CompTel/ASCENT Alliance was formed in November 2003 by the
merger of the two leading trade associations in the competitive
telecommunications industry, the Competitive Telecommunications Association
(CompTel) and the Association of Communications Enterprises (ASCENT). With
400 members, the Alliance is the largest association representing
facilities-based carriers, providers using unbundled network elements,
global integrated communications companies, and their supplier partners. The
Alliance, which is based in Washington, D.C., includes companies of all
sizes and profiles that provide voice, data and video services in the U.S.
and around the world. Despite a wide variety of business models, Alliance
members share a common objective: To create and sustain true competition in
the telecommunications industry. For more information, please visit
www.comptelascent.org <

(1) ALTS - ALTS CALLS FOR SUPREME COURT REVIEW OF THE D.C. CIRCUIT DECISION
Appeals Court Sets Out Criteria for Finding Impairment that Conflict with the Telecom Act.
WASHINGTON, D.C., March 2, 2004 - The following statement may be attributed
to John D. Windhausen, Jr., President of the Association for Local
Telecommunications Services ("ALTS"): "ALTS believes that the D.C. Circuit
Court of Appeals got it backwards. It vacated the portions of the FCC
decision that set up a state process to examine where alternative facilities
exist, and it upheld the FCC's unwarranted exemption from unbundling for
certain fiber-fed loops and for line sharing. As we expected after the oral
argument, this decision, if allowed to take effect, would increase the costs
to compete and would substantially delay our companies' deployment of
broadband. Once again, the D.C. Circuit ruling misconstrues the
Telecommunications Act and could undermine the unbundling rules. The
unbundling rules are the cornerstone of the Telecommunications Act; that is
why Congress included them in section 251 AND section 271. ALTS fully
supports appeal to the U.S. Supreme Court to rectify this incredibly
one-sided decision and urges the Federal Government to do the same. ALTS is
the leading national industry association whose mission is to promote
facilities-based local telecommunications competition. Located in
Washington, D.C., the organization was created in 1987 and represents
companies that build, own, and operate competitive local networks. For more
information on ALTS, visit the ALTS Web site at www.alts.org
*
(2) QWEST - PRESS RELEASE: Qwest Statement in Response to DC Circuit Court
Action on Triennial -- DENVER, March 2 /PRNewswire/ -- The following
statement is attributable to Steve Davis, Qwest senior vice president,
public policy, in response to today's action by The U.S. Court of Appeals
for the District of Columbia, in reversing the FCC's triennial review
order. "We applaud the court's decision, which allows companies like Qwest
to put their full focus on meeting the needs of customers. Today's
decision will soon free customers of mandates that force them to subsidize
the operations of Qwest's competitors. We look forward to working with the
FCC on new rules that benefit all telecommunications customers."

(3) SBC - SBC WELCOMES COURT DECISION ON WHOLESALE REGULATIONS March 2, 2004 The D.C. Circuit Court today ordered the Federal Communications
Commission to come up with new wholesale and unbundling rules that can pass
legal approval. This marks the third time since 1996 that the agency's rules
have been rejected by U.S. courts. In its ruling, the circuit court said the
FCC did not comply with the 1996 Telecommunications Act and its order from
two years ago to apply a workable, legal test to determine exactly what
competitors needed from incumbent local phone companies to compete. Known as
an "impairment" test, the court said the FCC erred by not providing unified,
federal guidelines and by pushing many FCC decisions to the states. Please
attribute the following to William Daley, President of SBC Communications,
Inc. Today's court action is a victory for consumers, and should help this
industry move forward in developing healthy, sustainable and economically
rational competition that will extend telecommunications innovations farther
and faster in the marketplace. The country, the industry and consumers
nationwide have been waiting eight years for a clear and legally sound set
of rules that is true to Congress' pro-competitive and pro-investment intent
in the Telecom Act. This appears to be a victory for those who support
markets free of rules that have repeatedly been judged illegal and which
have eliminated jobs, shrunk investment and hurt fair competition.

***** SBC Communications Inc. (www.sbc.com) is one of the world's leading data, voice
and Internet services providers. Through its world-class networks, SBC
companies provide a full range of voice, data, networking and e-business
services, as well as directory advertising and publishing. A Fortune 30
company, SBC Communications is America's leading provider of high-speed DSL
Internet Access services and one of the nation's leading Internet Service
Providers. SBC companies currently serve 55 million access lines nationwide.
In addition, SBC companies own 60 percent of America's second-largest
wireless company, Cingular Wireless, which serves more than 23 million
wireless customers. Internationally, SBC companies have telecommunications
investments in 26 countries.

(3) STATEMENT OF FCC COMMISSIONERS MICHEAL J. COPPS, KEVIN J. MARTIN, AND JONATHAN S. ADELSTEIN ON THE D.C. CIRCUIT'S DECISION TO ELIMINATE THE FCC'S RULES We are disappointed in the Court's decision to eliminate the Commission's rules requiring incumbent carriers to open their legacy voice
networks to competition. We believe that the rules preserve competition in
a manner that is lawful, and recognize the important role that states have
historically played. Today over 50 million Americans benefit from the new
local and long distance one-rate plans offered by both incumbents and
competitors that are a result of our rules. In the past, the Supreme Court
has made clear that the FCC has significant discretion in ensuring that the
local telephone markets are open to competition.
**********We have instructed our General Counsel to seek a stay and to
appeal the D.C. Circuit decision to the Supreme Court so that we can clarify
tension with the Supreme Court's past decisions.

(4) Statement of FCC Chairman Michael K. Powell Regarding The D.C. Circuit
Decision on Triennial Review

"Today's court ruling upheld the Commission's decision to spur the
development and deployment of vital broadband services to all Americans. As
a result, our citizens will enjoy the increased capabilities, innovation,
and lower prices of advanced wireline broadband services for decades to
come.

"I dissented from the majority's decision on local telephone competition
because it was inconsistent with the law and would result in years of
regulatory uncertainty and unrealized consumer promise. Today, the court
agreed and restored the opportunity to bring about new advanced services and
true competition that will bring consumers choice and innovation.
*********My fellow Commissioners and I need to expeditiously get to work to
produce a set of judicially sound rules, once and for all. I have already
directed the staff to begin preparing new rules that will provide the sorely
needed clarity and guidance essential to bringing consumers the benefits
they were promised and deserve.