December 19, 2001
The Computing Technology Industry Association’s Comments: Response to the Department of Commerce National Telecommunications and Information Administration’s Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications [Docket No. 011109273-1273-01] RIN 0660-XX13
The Computing Technology Industry Association (CompTIA) represents over 8,000 members worldwide in the converging computing and communications markets. A substantial portion of CompTIA’s membership consists of voice and data resellers.
These companies provide telecommunications services either directly to end users, or indirectly, by servicing companies that provide direct end-user telecommunications services. CompTIA’s communications resellers depend on competitive broadband services to stay viable. For CompTIA, the widespread deployment of, and access to, high-speed services also means something further -- through ubiquitous broadband, more Americans will be able to share in the rich benefits that information technology (IT) has to offer.
The best way to advance the deployment of high-speed broadband services remains full, and vigorous enforcement of the Telecommunications Act of 1996 (the Act). A regulatory environment that allows competitors access to essential network facilities is the most effective means to deploy high-speed broadband technology.
Using The Act Against Itself Thwarts Competition
The Act’s Conference Report notes that the law was crafted to:
“[P]rovide for a pro-competitive, deregulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition…”
Toward this end, the Act has thus far met with modest success. Billions of dollars have been invested in competitive broadband infrastructure. High-speed services have begun in earnest to make it into homes and small businesses. Many schools, libraries and hospitals across the nation are now tied to the Internet.
But, nearly six years after the Act’s, the results still remain mixed. Though a newly competitive market has sprung into existence, one needs only look to the spate of recent telecom company failures to see that something is not working. In this regard, CompTIA believes a trend has emerged: The Act could truly work but for the continued foot dragging of the Regional Bell Operating Companies (RBOCs).
According to industry and FCC estimates, broadband has yet to penetrate much more than 10% of the market, even though additional studies indicate that 85% of American households have broadband services available to them. Where it does exist, broadband cable and competitive DSL push, prod and poke the RBOCs into making similar service offerings available. The RBOCs – which serve nearly 90 percent of all American access lines – have clearly and consistently thwarted Congress’ goal of promoting rapid private sector deployment of advanced telecommunications and information technologies to all Americans. Their main tool in delaying deployment is the Act itself.
For Broadband To Proliferate, The Act Must Work
The Act sets out a balanced “carrot and stick” approach that was intended to spur local competition. Section 251 of the Act affirmatively requires all local incumbent providers to open their networks to competitors. Section 271 of the Act allows the RBOCs into in-region, long-distance service once their markets have been sufficiently opened to competition. Because the RBOCs then controlled more than 85 percent of the local loop, this comprehensive scheme was designed to give RBOCs what they wanted – i.e., in-region, long distance services -- only after they had given the market what it needed – i.e., real and meaningful competitive access to the local loop.
In crafting the Act, Congress recognized the myriad barriers to competitors. As the Act’s Conference Report states, “it is unlikely that competitors will have a fully redundant network in place when they initially offer local service, because the investment is so significant.” To mitigate these obstacles, Section 251 provides competitors with three primary entry tools: resale of incumbent services; interconnection of a competitor’s own facilities onto incumbent networks; and the lease of unbundled networks elements (UNEs) from incumbents.
Because full duplication of an incumbent’s network is expensive and largely unnecessary, interconnection of competitive facilities, combined with UNE leasing, has emerged as the most important manner for competitors to provide access to unique, service-oriented, and flexible competition to business, residential and rural customers. Purchasing network elements – such as the “loop” used for voice and DSL provision; switch ports; switching transport; signaling systems; and databases (e.g., OSS) – at reasonable, cost-based pricing has furthered the goals of the Act.
If competitors are denied UNE, the only other alternative is for each competitive local exchange provider to invest significant capital to duplicate the “last mile” of the RBOC network. Such an investment is unrealistic, inefficient, and contrary to the purpose of the Act. The existing RBOC networks took nearly 100 years to develop as a government sanctioned monopoly. Any regulatory reversal of full and fair access to the last miles is an abandonment of the core principles set forth in the Act, and therefore requires formal congressional approval.
The duties imposed upon incumbents take into account the evolving nature of technology. Importantly, nothing within the law limits the Act’s effect to “legacy” networks only. Incumbent bottleneck facilities that allow the provision of high-speed services must also be provided to competitors through the Section 251 process.
Furthermore, crafting separate policies for voice and data is antiquated. The future of communications services is digital. Creating separate policies for voice over “legacy” networks or data over broadband is obsolete. DSL is evidence that data can be carried over legacy networks and “voice over IP” technology is an example of the future of digital voice transmission. Developing separate policies for voice and data and/or their networks is misguided and unrealistic.
With the Act, Congress created a foundation to open up the local loop. However, nearly six years and many court challenges later, the incumbent industry still largely thwarts competitive access to the benefits of Sections 251 and 271. One needs only look to the long-distance entry of RBOCs to see how far local competition has come. To date, the RBOCs can provide in-region, long-distance service in only eight states. In 42 other states, Section 271’s 14-point competitive checklist – what the RBOCs should already be accomplishing through Section 251– remains unfulfilled. Quite simply, for broadband to proliferate, the Act must be made to work. Further erosion of the Act’s market-opening obligations will lead to fewer competitors on incumbent facilities.
The FCC Needs More Enforcement Authority
The FCC has been charged with implementing and enforcing the Act’s requirements. Instead of weakening its competitive entry rules, the FCC must vigorously enforce compliance. Each year, incumbent local providers pay many millions of dollars in fines for violations of the Act. According to Michael Powell, Chairman of the FCC, “For many large carriers the penalties could be absorbed as the cost of doing business.” In Powell’s estimation, rules guiding competitive entry are “meaningless without a credible enforcement effort to back them up.”
In this regard, Powell has called on Congress to give him more enforcement power. Local competition for legacy and high-speed services will be better served by rigorous enforcement of existing law.
H.R. 1542 Will Stop American Broadband Deployment
One proposal that will discourage high-speed deployment is H.R. 1542 (Tauzin/Dingell), a bill sponsored by Representatives Billy Tauzin and John Dingell. Ostensibly designed to promote the spread of broadband, H.R. 1542 would significantly undermine the Act by shutting down competitive UNE access to incumbent high-speed infrastructure. In addition, H.R. 1542 would allow the Bell companies to provide long-distance, high-speed services in their territories without first opening their local markets to competition. In short, both actions would eviscerate the strong incentive for the RBOCs to open their networks to competitors.
For nearly a decade the RBOCs had access to high-speed technology, such as DSL, but failed to deploy it. Not until the Act was implemented and competition injected into the marketplace did the RBOCs offer DSL. Telecommunications competition has resulted in more choices, lower prices, and better services for American consumers. Today, competitors carry 60% of the Internet traffic at rates 10-50% percent below RBOC rates. It will drive up costs and drive out innovation by drying up the competitive provision of broadband.
As noted above, CompTIA's members -- particularly its small and medium sized IT solution providers -- depend on a competitive broadband market to help them sell their IT wares to end users. America depends on competitive broadband, too. Hundreds of billions of dollars of our economy flow through high-speed networks. Competitive broadband means this will grow, fostering new and exciting gains that will benefit all consumers in our IT-dependent economy.
Broadband cable, competitive DSL, and other emerging high-speed technologies have pushed this growth along. Though still small, approximately 10 million Americans have some form of high-speed services in their homes or small businesses. Competitors have been able to stake a modest claim to the market because of a relative lack of regulation. This asymmetry was purposely built into the Act as part of the “carrot and stick” approach thought best to push competition, wherever, and in whatever technological form, it took. H.R. 1542, if passed, would upset this balance, jeopardizing the nascent Internet economic environment by forcing competitors to erect prohibitively expensive and redundant networks. This likely outcome would inhibit severely the spread of competitive broadband throughout America.
Passage of the landmark 1996 Telecommunications Act was significant in several ways. One important characteristic of the Act was that it was the end product of comprehensive deliberations that occurred in both chambers of Congress over several years. These comprehensive and open deliberations resulted in a balanced product on which all members were able to vote. CompTIA strongly objects to any regulatory effort to implement the provisions or intentions of H.R. 1542 without these policies having been fully debated and approved in Congress.
Dramatic rewrites of the telecommunications act, such as (H.R. 1542), should not be adopted at all, much less through regulatory actions without the approval of Congress. Such a process of policy implementation lacks integrity and undermines a fair and open debate.
In promoting the deployment of high-speed services in rural, insular and low-income communities, one way of achieving this goal is through Internet broadband tax credits. Such an approach has been taken in both Senate and House legislation, to promote greater deployment of high-speed facilities in rural and low-income areas. Tax credits for current and next generation high-speed services could push high-speed deployment into served areas without undermining the 1996 Telecommunications Act.
In sum, the best way to promote the widespread provision of high-speed services remains full, vigorous and uncompromising enforcement of the Act. Granting the FCC greater enforcement abilities, allowing for the passage of an Internet Broadband Tax Credit, and refusing to import current universal service policies to the high-speed marketplace will also help accelerate private sector deployment of advanced telecommunications and information technologies to all Americans.
Any questions regarding these comments please contact Thomas Santaniello, Public Policy Manager (703) 812-1333 ext. 204 or email email@example.com