SBC Communications Inc. on Thursday announced plans to accelerate construction of fiber networks to millions of homes over the next few years to deliver advanced communications services after federal regulators granted the regional Bells further relief from having to share new infrastructure with competitors.
SBC, the second largest local phone company operating in 13 states, disclosed plans to provide 18 million homes high-speed data, video and voice services in two to three years in the wake of the FCC’s decision, rather than five years as previously announced. The San Antonio, Texas, company plans to reach 18 million homes by the end of 2007, deploying 38,800 miles of fiber at a cost of $4 billion to $6 billion.
“Rational rules promote innovation and investment in new networks and services for consumers. And so with this positive policy movement, the delivery of next-general broadband and video services is no longer at some distant point in the future,” SBC Chairman and CEO Ed Whitacre said in a statement.
The FCC on Thursday voted to relieve incumbent phone companies such as BellSouth Corp. and SBC from having to share local loops with competitors if they build a fiber network within 500 feet of a home or small business. The commission also said local phone companies are not required to build TDM voice capability into new packet-based networks or into current packet-based networks that never had such capability.
In August, the FCC ruled the biggest local phone companies building fiber networks to predominantly residential multi-dwelling units don’t have to lease the infrastructure to rivals. That ruling, and today’s vote, build upon the commission’s Triennial Review Order last year: the massive regulatory order freed the regional Bells – BellSouth, SBC, Qwest Communications International Inc. and Verizon Communications Inc. – from having to rent fiber networks extending to homes to competitors such as AT&T Corp. and MCI Inc.
BellSouth, SBC and Verizon all have announced plans to build fiber networks to millions of homes over the next few years to deliver advanced communications services, including video, representing an alternative to cable TV.
In a statement released today, Atlanta-based BellSouth said it planned to increase by 40 percent the number of homes it annually reaches with a fiber network. BellSouth plans to pass 130,000 additional homes this year with a fiber network, BellSouth spokesman Kevin Curtin said, and the No. 3 local phone company intends to reach 180,000 homes next year.
“Deep fiber networks offer consumers a ‘triple play’ of voice, video and data services and an alternative to cable,” said FCC Chairman Michael Powell, who is a big advocate of broadband deregulation. “By limiting the unbundling obligations of incumbents when they roll out deep fiber networks to residential consumers, we restore the marketplace incentives of carriers to invest in new networks.”
National consumer groups opposed the FCC’s vote, complaining it moved the country closer to cementing a duopoly in the high-speed Internet market between the local phone company and the cable operator.
“The FCC today took our country one giant step closer toward solidifying a two-company domination – the local cable and telephone providers – over the consumer Internet market,” Consumers Union Senior Policy Director Gene Kimmelman said in a statement. “As both industries tighten their hold on high-speed Internet (broadband) access, consumers will see their choices diminish and their bills skyrocket.”
When asked about the potential for a duopoly in the broadband market, FCC Commissioner Kathleen Abernathy on Wednesday told reporters at the United States Telecom Association trade show in Las Vegas she was not particularly concerned, given the various platforms used to deliver high-speed Internet access. Responding to the same question, FCC Commissioner Kevin Martin said the FCC would continue to watch Internet competition develop and make sure the industry did not get into that predicament. Both commissioners on Thursday voted to adopt the new rules granting the biggest local phone companies an incentive to build fiber networks within 500 feet of a home.
Jason Oxman, general counsel with the Association for Local Telecommunications Services, says the regional Bells are recapturing their monopoly position over the local loops, the last part of the incumbent network which is generally considered the most expensive to replicate. In a recent interview, Oxman said the cost of the fiber is not what makes building a network to homes so expensive; rather, it is the cost of building telephone poles, digging trenches and securing rights of way, “all that stuff the Bell companies own as a result of their monopoly,” he says.
“Every step the commission takes is an evisceration of unbundling rules that apply to the monopoly loop plant and that’s just wrong,” Oxman says.
In dissenting remarks today, FCC Commissioner Michael Copps, one of two Democrats on the commission, rejected the majority’s decision to grant further broadband deregulation.
“Monopoly control of the last mile created all kinds of problems for basic telephone service in the last century, and now we seem bent on replicating that sad story for advanced services in the digital age,” said Copps, who is considered a frontrunner to take over the FCC as the interim chairman if Massachusetts Senator John Kerry wins the presidential election. “Unfortunately, the digital age is going to take a lot longer to get here because of the blows we are inflicting on competition.”
