SBC Communications Inc. (www.sbc.com) filed comments with the National Telecommunications and Information Administration (NTIA, www.ntia.doc.gov) this week urging the Bush administration to establish a comprehensive national broadband policy that encourages private investment in broadband infrastructure.
SBC's framework emphasizes the removal of barriers that have slowed down the rollout of broadband networks to date, clearing the way for valuable new services to consumers and advancing a number of important public policy goals, such as improving the quality of education and increasing economic opportunity for more Americans.
SBC's filing Dec. 19 was in response to NTIA's Nov. 19 notice seeking comment on issues related to broadband deployment in the United States.
"While the current economy demands that we establish a regulatory regime that removes economic disincentives to investment in broadband infrastructure, regulatory reform is warranted regardless," said Priscilla Hill-Ardoin, SBC's senior vice president-federal regulatory.
The current regulatory environment is adversely impacting competition, efficiency, and investment in the deployment of broadband infrastructure, according to SBC. The marketplace is skewed when significant cost and other advantages are provided to SBC's competitors, advantages that SBC claims "are flatly inconsistent with federal regulators' longstanding recognition that consumers, not regulators, should pick winners and losers in the marketplace."
By reducing incentives for companies such as SBC to invest in broadband facilities, the result is less competition, lower productivity, fewer jobs, and fewer consumer benefits, according to the company.
"The current regulatory regime for advanced services makes no sense," Hill-Ardoin said. "It subjects one class of broadband providers --- incumbent local exchange carriers like SBC --- to burdensome and costly regulations and ongoing uncertainty, while leaving all other broadband providers, including the dominant player in the market, wholly unregulated."
SBC recommended the establishment of a comprehensive national broadband policy that applies to all broadband providers and platforms, based on three principles:
1.) Regulators should take a hands-off approach to the broadband market.
2.) Broadband policy must be competitively and technologically neutral.
3.) National broadband policy should provide regulatory certainty across all jurisdictions.
"Regulation of SBC's broadband investment has already had an impact on its broadband deployment by increasing costs, creating massive engineering hurdles and adding layers of bureaucracy," Hill-Ardoin said. "The combined weight of these regulations … is slowing, or even halting, further roll out of broadband infrastructure. And American consumers pay the price."
In 1999, SBC announced it would spend $6 billion over three years to extend the availability of high-speed broadband services to residential consumers throughout its 13-state territory. SBC's goal for Project Pronto was to provide broadband capability to about 80 percent of its local telephone customers, and ultimately to deliver broadband services to millions of Americans.
Since then, federal and 10 out of 13 state regulators in SBC's territory have imposed or are considering additional unbundling and other requirements on Project Pronto. In October, faced with ever-increasing regulatory risk and uncertainty combined with a severe economic slowdown, SBC announced that it would reduce capital spending by 20 percent in 2002 and scale back its original deployment schedule for Project Pronto.
By contrast, SBC points out that regulators have taken a hands-off approach to the cable modem services of AT&T Broadband (www.att.com), which is merging now with Comcast Corp. (www.comcast.com); AOL Time Warner Inc. (www.aoltimewarner.com); Cox Communications (www.cox.com); and other cable operators.
Because of this approach, SBC claims that these cable operators have had total flexibility to design their networks and package their broadband services in the most cost-effective manner; and they have not been required to artificially segregate the transmission component of their broadband services. They have had exclusive use of their broadband networks and been able to use their networks solely for delivering broadband services to their own customers; they have not been subject to costly and inefficient unbundling requirements. They have had complete freedom to set prices for broadband services; they have not been subject to any federal or state pricing requirements. They have subsidized the build out of their cable modem networks with cable television revenues; they have not been subject to structural separation, affiliate or cost allocation requirements, or price regulation, SBC says.
Given what SBC calls "the unjustified gross regulatory disparity," the incumbent says it's no surprise that cable modem service dominates today's broadband market. Cable modem providers have twice as many subscribers as DSL providers and their market share has been widening in the past year, according to SBC.
"SBC has felt the impact of regulations and can speak with authority on how federal and state policymaking has impeded broadband deployment so we are encouraged by the administration's efforts to determine the best course forward," Hill-Ardoin said.
