Overview Of The FCC's Proposed Rules: Their Impacts And The Current Telecom Landscape. Whether intentionally or by accident, it appears to TeleTruth that the Commission is pursuing a policy of creating a broadband duopoly, so that cable services and the ILECs are the only two real competitors left. This will happen by virtue of the Commission's proposals to shut off Competitive Local Exchange Company (CLEC) and ISP access to the broadband capabilities of existing and upgraded wireline phone networks. The policy rational for this duopolization is "deregulation." Since cable operators are not and have never been subject to common carrier obligations with respect to their plant - which has always been used to offer information services, not telecom services - the logical response, it might seem, is to ensure that ILECs and cable operators can play on a "level" - and deregulated - playing field. So in the name of fairness, the Commission is considering policies that will block resale of ILEC broadband networks to competitors. This will not promote competition. It will stifle the access of the most innovative entities in telecom/Internet space today - CLECs and small ISPs - to the essential facilities they need to survive, offer new services, and meet consumer needs. (As a separate matter, such a policy also has the effect of rewarding the Bell companies for years of strategic incompetence and non-compliance with Commission regulations implementing Sections 251 and 252 of the Act, while insulating them from competitive pressures.) The Commission's stated interest in relying on "intermodal" competition does not justify this policy of "parity" either. Whether the focus is on communications services or in the broader economy, it is certainly true that intermodal competition has repeated "shaken up" established markets (e.g., trucks vs. railroads; DBS vs. cable; undersea cables vs. satellites). But it has never done so by creating a regime in which the new intermodal competitor is regulated in the same way as the incumbent sought to be dislodged. To the contrary, incumbents in any industry are subject to rules and requirements that typically evolved over time based on extensive experience with the particular ways in which the incumbents need to be encouraged or restrained in the provision of their goods and services. The fact that a new firm with a different production technology figures out a way to attack a market that was monopolized or oligopolized by a group of incumbent firms does not remotely suggest that the incumbent should be relieved of the basic regulatory obligations that go along with incumbency - at least not until the insurgents have so thoroughly dislodged the former monopolist that there is no turning back. As a result, the effect of adopting deregulatory policies for the ILECs now will be that customers' broadband choices will be dramatically lessened. Satellite, wireless and all of the other promising technologies cannot yet fill the void that will exist if current small ISPs and CLECs are frozen out of the market by prematurely acceding to ILEC demands to be freed from the restraints that Congress placed on them. In this regard, if the FCC is serious about promoting intermodal competition with the ILECs, it should do everything that it can to ensure that entities with different and disruptive technologies that can be used to duplicate some or all of the functions of the ILECs' network are free from ILEC-like regulation to the maximum extent feasible. Cable operators seeking to offer switched telephony should be given as broad and as preemptive a deregulatory environment as possible. Wireless firms offering substitutes for landline service - whether narrowband or broadband - should not face any significant regulatory barriers to their offerings. From this perspective, the Commission's ongoing flirtation with "regulatory parity" and "level playing field" ideas actually discourages innovative investment and service offerings from currently unregulated players such as cable operators. To these entities, "regulatory parity" is an implicit threat - come too near the monopolists' preserve, and you, too, may be subject to regulation of the type we have developed historically for monopolists. These entities' only alternative is to stand mute while the monopolists promote their own deregulatory, anti-consumer agenda. The ILECs will of course whine that to allow them to be subject to competition from unregulated entities while they remain regulated is unfair, and that such a situation somehow degrades their "incentive" to actually deploy new technologies needed to compete. This, of course, is nonsense. The ILECs have spent the last fifteen years selling that particular type of snake oil to regulators around the country. Over and again, the ILECs argued that new technology and new competition was radically affecting their businesses, and that only with new "incentives" in the form of relaxed regulation would the ILECs be able to actually deliver new services the market - typically some type of "fiber to the curb" or "fiber to the home" arrangement. Yet over and again, in states ranging from New Jersey to California, the ILECs received their regulatory breaks, and over and again failed to deliver the goods. This is seen most recently with SBC in Illinois, where - after announcing "Project Pronto" as part of its effort to get approval for purchasing Ameritech - SBC basically tried to bully regulators into offering regulatory concessions by holding the actual fiber deployment contemplated by Project Pronto hostage. Why this Commission thinks that things would turn out any differently if it buys the current iteration of ILEC advanced services snake oil is a mystery. It is also nonsense because nothing prevents the ILECs from competing fairly while treating their competitors and customers fairly as well. The very existence of the intermodal competition that the Commission rightly wants to encourage will force ILECs either to compete with the intermodal insurgents, or - equally acceptable from a public policy perspective - cede responsibility for that battle to CLECs who are more able to deal with the stresses of such activity. But adopting policies that freeze out the CLECs and their ISP customers in the hope that this will "encourage" the ILECs to engage in the competitive fray makes no sense. "Intermodal" competition is not ILECs versus cable operators. It is the copper-and-fiber-and-switches telecom infrastructure versus the hybrid-fiber-coax cable infrastructure. In that battle, the ILECs and the CLECs are on the same side, against the cable operators - and the Commission should do everything it can to encourage the fight. Adopting policies that keep the CLECs from making the most effective and innovative use possible of the copper infrastructure is like sending the telecom side into battle without its Special Forces - the troops that may not play by the traditional rules, but whose activities are critical to the success of the mission. Finally in this regard, most customers know that the price of their services keep rising, that the quality of services is deteriorating and that the roll out of DSL has been a nightmare. One of the major reasons for these problems has been that regulators, including this Commission, have not actively enforced the current laws. In surveys conducted by New Networks Institute over the last three years, we have documented these problems and it is clear that these current proposed rules by the FCC do not fix any of these issues, but instead removes problematical services from regulation rather than focusing on forcing recalcitrant Bell companies to obey the law. In the comments below, we will show that the FCC has an obligation to make sure that the thousands of small telecom competitors, as well as customers, are treated fairly.