Before the

DEPARTMENT OF COMMERCE

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

Washington, D.C.20230

In the Matter of)

)

Request for Comments )Docket No. 011109273-1273-01

Deployment of Broadband Networks)

and Advanced Telecommunications)

COMMENTS OF AT&T CORP.

Howard J. SymonsMark C. Rosenblum

Michelle M. MundtStephen C. Garavito
Susan S. Ferrel*Room 1131M1

Mintz, Levin, Cohn, Ferris, Glovsky295 North Maple Avenue

and Popeo, P.C.Basking Ridge, New Jersey07920

701 Pennsylvania Avenue, N.W.(908) 221-8100

Suite 900

Washington, D.C.20004Carol W. Wilner

(202) 434-7300Vice President - Federal Government Affairs

1120 20th Street, N.W.

Of CounselWashington, D.C.20036

(202) 457-7435

Douglas Garrett

James H. Bolin, Jr.

AT&T Broadband

188 Inverness Drive West

Sixth Floor

Englewood, CO80112

(303) 858-3506

December 19, 2001


EXECUTIVE SUMMARY

AT&T strongly supports the adoption of federal telecommunications policies that will foster deployment of broadband facilities and enhance consumer acceptance and promote competition in the provision of broadband services.Broadband has the potential to promote economic recovery by spurring growth in the telecommunications and related industries, such as the manufacture of switching and routing equipment, and by increasing the efficiency and productivity of all sectors of the economy.The adoption and deployment of broadband is also important beyond the telecommunications sector.Broadband connections will be vital to achieving our Nation’s economic, national security, government, health, and educational goals in the years ahead.

Since the enactment of the Telecommunications Act of 1996, competitive carriers,
incumbents, cable companies, and others have invested tens of billions of dollars in
broadband facilities.  According to recent industry data, nearly 80 percent of
Americans now have access to broadband services.  Nonetheless, only about 10 percent
of these potential customers actually subscribe.  AT&T believes that there are
targeted efforts the federal government could undertake to bring broadband to unserved
areas, but it can most effectively promote broadband deployment by increasing demand
for broadband services and promoting competition among companies to provide those
services.  Such an approach will allow a strong and healthy market for broadband
services to develop, which in turn will decrease the need for government regulation
in the future.  There are four integral components to this approach.  
First, the federal government should take targeted steps to complete nationwide broadband deployment.While broadband services have been widely deployed, there is some evidence that deployment may be lagging in some areas, possibly as a result of technological and economic factors.In areas where a careful analysis in fact evidences that market forces may not be adequate to promote broadband deployment, AT&T would support targeted government action to address this limited problem, such as tax incentives to bring broadband to unserved communities.NTIA can and should take other actions to encourage deployment and ensure that it continues to be robust, for example by working with federal land agencies, states, and localities to enhance access to federal lands and other rights-of-way by broadband providers.

Second, the federal government should adopt policies that spur demand for broadband services.With broadband available to 80 percent of Americans, government efforts should focus on helping to build demand for broadband services.One way to do this is by providing tax credits to employers based on the number of employees who work from home.These teleworkers are seen as a prime source of potential demand because of their need to have broadband access from home.In addition, the government should lead by example by using broadband applications to conduct business and by moving government business online where possible.Broadband applications can be an integral part of achieving the goals outlined by the Administration in education, healthcare, and economic growth in rural areas.Providing more and better online applications in all these areas would not only increase government agencies’ demand for broadband facilities, but also would encourage more citizens to seek broadband connections in order to improve their ability to interact with the government online.

Third, the government should encourage competition among providers of broadband services by opening the local exchange market to competition.The government can improve deployment by assuring that competitors have access to the essential facilities controlled by the incumbent Bell monopolies.The biggest impediment to the efficient, economic deployment of broadband services is the ILECs’ monopoly control over essential facilities, and the best way to spur broadband deployment therefore is to provide competitors with access to these facilities.To spur broadband deployment, the federal government must demonstrate a renewed commitment to the principles of the 1996 Act and support for the interconnection, unbundling, and resale requirements designed to end monopoly control over the local telephone market.Structurally separating the Bell companies’ retail and wholesale operations, as proposed in legislation recently introduced by Senators Hollings, Stevens, and Inouye, would make it harder for them to discriminate against competitors and would also reduce the need for costly monitoring and oversight.

There’s no evidence that the pro-competitive requirements of the 1996 Act have discouraged Bell investment in broadband facilities.To the contrary, in the past five years the Bells have made extraordinary investments in broadband facilities and services in response to competition, and today they provide more than 90 percent of residential DSL services.In fact, the evidence clearly shows the Bells sat on DSL technology for 10 years because it would have cannibalized the Bells’ profitable second lines and T1 circuits.Only when the competitive local exchange companies and cable companies began deploying high-speed services did the Bells respond by rapidly deploying DSL.

Finally, it should be NTIA policy to decrease regulation and rely on market forces where markets are competitive.Given the lack of a competitive local exchange market, there remains a continuing need for effective government oversight and enforcement.There are not two separate sets of network elements -- one for “broadband services” and one for traditional voice services -- and an “old wires/new wires” distinction is neither a sound nor meaningful foundation for broadband policy.To the contrary, the incumbents are upgrading their networks to provide both voice and advanced services with increased efficiency.These investments are incremental, added to the existing network architecture.A policy that seeks to impose different rules on different network elements would frustrate competition in voice and data.

Broadband policy must also recognize that differences in market power justify different regulatory treatment.While initially compelling in its simplicity, the concept of “regulatory parity” ignores important market distinctions between ILECs, on one hand, and CLECs and cable companies on the other.These distinctions are embodied in the structure of the 1996 Act.There are good reasons why cable companies and ILECs are regulated differently, starting with the fact that cable companies face substantial competition in their core video business.In any event, it is a myth that cable companies operate on an unregulated basis.To the contrary, cable companies are subject to significant regulatory obligations, such as local franchising requirements and the payment of local franchise fees, that do not apply to ILECs.

Incorporating these overarching principles in any federal broadband policy will ensure that Americans receive the benefits that robust competition can bring to broadband deployment -- lower prices, more choices, technical innovation, and increased productivity.The telecommunications and technology industries have driven the American economy in the past and can do so again in the future, under a federal broadband regime that promotes competitive deployment and consumer adoption of this promising technology.

TABLE OF CONTENTS

                  Page

DISCUSSION.. 1

A.Primary Broadband Policy Considerations1

B.Definitions7

C.Deployment of Broadband Services13

D.Access to Broadband for All Americans18

E.Interconnection, Unbundling, and Resale Requirements of the 1996 Act19

F.The Myth of “New” Networks26

G.CLEC Deployment of Transport, Switching, and Loops27

H.Broadband Cable Modem Services30

K.The Myth of “Regulatory Parity”32

L.Local Issues Affecting Broadband Deployment36

M.Impediments to Access to Federal Lands and Buildings40

N.Need for Legislation42

CONCLUSION42


Before the

DEPARTMENT OF COMMERCE

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

Washington, D.C.20230

In the Matter of)

)

Request for Comments )Docket No. 011109273-1273-01

Deployment of Broadband Networks)

and Advanced Telecommunications)

COMMENTS OF AT&T CORP.

AT&T Corp. (“AT&T”), by its attorneys, respectfully submits these comments in response to NTIA’s request for comment on broadband deployment in the United States. [1] NTIA has posed a number of questions regarding broadband deployment.AT&T’s answers to these questions follow.

DISCUSSION

A. Primary Broadband Policy Considerations

AT&T strongly supports the adoption of federal telecommunications policies that will foster deployment of broadband facilities and enhance consumer acceptance and promote competition in the provision of broadband services.Broadband has the potential to promote economic recovery by spurring growth in the telecommunications and related industries, such as the manufacture of switching and routing equipment, and by increasing the efficiency and productivity of all sectors of the economy.Broadband services are not just faster versions of today’s telecommunications offerings.As the Administration itself is well aware, “the opportunities and innovation offered by high-speed networks are crucial to promoting America’s productivity and our people’s welfare.” [2]/

No one appears to dispute the importance of promoting broadband deployment, but there
are a wide variety of opinions on the role the federal government should play in spurring
that deployment.  AT&T believes that the best way for the federal government to
promote broadband deployment is to increase demand for broadband services while promoting
competition among companies to provide those services.  Such an approach will allow
a strong and healthy market for broadband services to develop, which in turn will decrease
the need for government regulation in the future.  There are four integral components
to this approach.  
First, the federal government should take targeted steps to complete nationwide broadband deployment. [3]/While broadband services have been widely deployed, there is some evidence that deployment may be lagging in some areas, possibly as a result of technological and economic factors.In areas where a careful analysis in fact evidences that market forces may not be adequate to promote broadband deployment, AT&T would support targeted government action to address this limited problem, such as tax incentives to bring broadband to unserved communities.NTIA can and should take other targeted actions to encourage deployment and ensure that it continues to be robust, for example working with federal land agencies, states, and localities to enhance access to federal lands and other rights-of-way by broadband providers.

Second, the federal government should adopt policies that spur demand for broadband services.[4]/With broadband available to 80 percent of Americans, government efforts should focus on helping to build demand for broadband services.One way to do this is by providing tax credits to employers based on the number of employees who work from home.These teleworkers are seen as a prime source of potential demand because of their need to have broadband access from home.In addition, the government should lead by example by using broadband applications to conduct business and by moving government business online where possible.Broadband applications can be an integral part of achieving the goals outlined by the Administration in education, healthcare, and economic growth in rural areas.Providing more and better online applications in all these areas would not only increase government agencies’ demand for broadband facilities, but also would encourage more citizens to seek broadband connections in order to improve their ability to interact with the government online.

Third, the government should endorse competitive pricing and provisioning of essential network elements to increase investment in local broadband services.[5]/The current abundant supply of broadband services and facilities is a direct result of the entry of new competitors in response to the market-opening provisions of the Telecommunications Act of 1996 (the “1996 Act”).Under the spur of competition, the Bell companies also invested in broadband facilities and services.Competition encourages both new entrants and incumbents to lower their prices, provide innovative services, and broadly deploy broadband facilities in order to win new customers and retain old ones.In response to the passage of the Act, AT&T and dozens of other companies invested billions of dollars in new telecommunications facilities and services.In addition to spending over $95 billion to acquire and upgrade cable facilities to provide telephone competition, AT&T purchased Teleport for $11 billion to serve business customers and paid $135 million to acquire the DSL assets of the now-defunct NorthPoint Communications.Clearly, vibrant facilities-based competition is a goal that AT&T supports wholeheartedly, but resale and access to ILEC network elements are necessary to achieve that goal because they allow new entrants to enter the marketplace and gain customers while they are building their networks.Long distance competition developed because MCI and Sprint were able to resell AT&T’s service, and the ILECs themselves are entering the long distance business today as resellers of long distance carrier services.

The Organization for Economic Cooperation and Development (“OECD”) recently reported that, “[i]nitiatives to open the local loop are viewed by most OECD governments as being fundamental to promoting a fast rollout of broadband services….[T]here are huge investments being made by new entrants in local access markets, where unbundled elements are available, to provide broadband services.”[6]/The OECD report also concludes that unbundling does not deter incumbents from investing in upgrading networks or new entrants from investing in their own infrastructure.[7]/Experience in the United States following passage of the 1996 Act substantiates this finding.

But while the 1996 Act promised to end almost a century of monopoly control over the local telecommunications market and bring the benefits of competition to consumers, the incumbent local exchange carriers’ (“ILECs’”) strategy of resistance, delay, and litigation has enabled them to maintain their dominance of the local telephone market and expand that dominance into broadband, while their competitors scale back service plans or even go out of business entirely.

To promote broadband deployment, therefore, the federal government must demonstrate a renewed commitment to the principles of the Act and support for the interconnection, unbundling, and resale requirements designed to end monopoly control over the local telephone market.Part and parcel of this commitment is a pricing standard for network elements that fairly compensates incumbents but does not saddle competitors with inefficient and excessive costs that are a legacy of one hundred years of monopoly control.A fair pricing standard already exists, and it has been advocated by incumbent LECs, adopted by state and federal regulators, and upheld by the courts:it is the Federal Communications Commission’s total element long run incremental cost (“TELRIC”) methodology.There is no need for the NTIA to reopen consideration of TELRIC, however.Litigation over TELRIC twice has risen all the way to the United States Supreme Court, and the Court is on the verge of issuing a decision addressing the lawfulness of TELRIC for what is hoped will be the last time.Any action on the part of the Administration to enter the debate currently before the Justices will only create further disarray and uncertainty in a telecommunications industry that is already reeling, discouraging investment and making overall economic recovery and growth that much more difficult.

Finally, it should be NTIA policy to decrease regulation and rely on market forces where markets are competitive.Currently, however, given the lack of competition in the local exchange market, there remains a continuing need for effective government oversight and enforcement.That lack of competition is relevant to the present inquiry.As Nancy Victory, the Administrator of NTIA, has explained, “broadband does not exist in a vacuum. . . .[T]he competitive framework that we have established for traditional voice services both impacts, and is impacted by, broadband services and the challenges broadband presents.”[8]/

There are not two separate sets of network elements -- one for “broadband services” and one for traditional voice services -- and an “old wires/new wires” distinction is neither a sound nor meaningful foundation for broadband policy.To the contrary, the incumbents are upgrading their networks to provide both voice and advanced services with increased efficiency.These investments are incremental, added to the existing network architecture.A policy that seeks to impose different rules on different network elements would frustrate competition in voice and data.

Broadband policy must also recognize that differences in market power justify different regulatory treatment.[9]/While initially compelling in its simplicity, the concept of “regulatory parity” ignores important market distinctions between ILECs, on one hand, and CLECs and cable companies on the other.These distinctions are embodied in the structure of the 1996 Act, which limits unbundling and interconnection requirements to ILECs, distinguishing in law between incumbents and competitors. [10] /There are good reasons why cable companies and ILECs are regulated differently, starting with the fact that cable companies face substantial competition in their core video business.In any event, it is a myth that cable companies operate on an unregulated basis.To the contrary, cable companies are subject to significant regulatory obligations, such as local franchising requirements and the payment of local franchise fees, that do not apply to ILECs.

Incorporating these overarching principles in any federal broadband policy will ensure that Americans receive the benefits that robust competition can bring to broadband deployment -- lower prices, more choices, technical innovation, and increased productivity.The telecommunications and technology industries have driven the American economy in the past and can do so again in the future, under a federal broadband regime that promotes competitive deployment and consumer adoption of this promising technology.

B. Definitions

NTIA asks how broadband services should be defined.[11]/An appropriate definition of broadband is critical to the inquiry that NTIA has undertaken because it establishes the scope and goals of that inquiry and the policies that flow from it.The federal government must avoid an overinclusive definition that would promote the use of conventional technology offering no real improvement to consumers, as well as an underinclusive definition that excludes technologies representing a clear advance over conventional telecommunications.In particular, an underinclusive definition could lead NTIA to underestimate the extent of broadband deployment and incorrectly conclude that some sort of drastic federal intervention is necessary.In order to avoid such a result, NTIA’s definition of broadband services should include any services that, as a result of the enhanced download transmission speeds they offer, clearly represent an advance over conventional telecommunications facilities.

The FCC has properly defined “high-speed” services to include all services with over 200 kilobits per second (“kbps”) capability in at least one direction,[12]/ including cable modem services, satellite Internet access services that use telephone return paths, and certain DSL services that do not deliver upstream capacity of 200 kbps, but provide the public with the faster download speeds that are generally thought of as “broadband.”By contrast, the FCC has defined “advanced telecommunications capability” as “supporting, in both the provider-to-consumer (downstream) and the consumer-to-provider (upstream) directions, a speed (in technical terms, ‘bandwidth’) in excess of 200 kilobits per second (kbps) in the last mile.”[13]/

An asymmetrical definition of broadband services that includes two-way services that offer at least 200 kbps downstream transmission, but does not require upstream speeds greater than those provided by existing dial up services, would be consistent with the predominant uses of the Internet today and for the foreseeable future.Consumers, particularly residential consumers, spend most of their time on the Internet downloading information, while their upstream transmissions consist mainly of mouseclicks or keystrokes.For example, a recent survey revealed that nearly 48 million Americans primarily use the Internet for sending and receiving email, while thirty-three percent said they use the Internet largely for research.[14]/Other popular activities include participating in chat rooms, engaging in financial transactions and downloading MP3 music files.[15]/These applications do not require fast upstream transmission, but they benefit from improved downstream capacity.Likewise, most residential consumers do not operate servers or other equipment that require substantial upstream capacity; even Web pages created by a subscriber can be uploaded from a conventional PC.[16]/

A definition of “broadband” that requires upstream as well as downstream capability of more than 200 kbps would exclude numerous services that provide consumers with the fast downstream speeds they crave.For example, a two-way satellite Internet service offered by Hughes and Intellicom will allow download speeds ranging from 400 kbps to 30 megabytes per second (“mbps”) and upload speeds of 128 to 500 kbps.[17]/Services that combine high-speed satellite downloads with a telephone return path also meet consumer needs for broadband services, and likewise should not be excluded.Hughes’ DirecPC service, for example, offers Internet access at a speed of 400 kbps downstream (via satellite), but provides slower upstream speeds (via telephone lines).[18]/Similarly, the most common cable modems,[19]/ and ADSL services,[20]/ provide faster downstream than upstream data rates.

A definition of broadband services that focuses on downstream speed would capture the range of services that represent an advance over conventional telecommunications facilities today.Of course, what is considered “broadband” will evolve over time -- after all, direct dialed long distance calls using rotary telephones were once considered to be advanced.As two-way broadband facilities are more widely deployed and consumers embrace applications that require greater upstream speed, NTIA may determine that its definition should be revised.Marketplace developments should guide this process of review and revision, so that conventional technology is not mistaken for a broadband offering and “broadband” services are not defined so broadly as to exceed reasonably foreseeable consumer demand.

NTIA also asks how the “broadband product market” should be defined.[21]/AT&T agrees that before NTIA can understand the true market position of the various providers of broadband services, it is first necessary to correctly define the product market that includes broadband services.Like the definition of broadband itself, the definition of the product market should be guided by marketplace reality and consumer expectations, and therefore should include Internet access services available to consumers over both broadband and narrowband facilities.Once the product market is properly defined, it is clear that cable operators and CLECs are new entrants in an Internet market dominated by the ILECs and AOL.

Regardless of whether they utilize broadband or narrowband facilities, these firms compete with each other to provide the combination of price, service, speed, and convenience best suited for each consumer.Broadband and narrowband services are priced competitively, each costing about fifty dollars per month when a second phone line for dial-up access is factored in.[22]/Currently, the main advantage that broadband facilities have over narrowband facilities is the faster speeds they provide.However, the array of applications tailored to the broadband environment is currently limited, and consumers who use Internet services primarily for email and “chat” functions may have no need for faster download speeds.Indeed, many market observers believe that the current slow take-rate for broadband Internet access is attributable at least in part to the fact that consumers do not find “high-speed” in and of itself to be a compelling reason to leave narrowband.[23]/In the current economic downturn, many consumers have cancelled high-speed connections and returned to dialup Internet access services, further confirming that the two services are within the same product market.[24]/

Once the “broadband” product market is defined correctly, the true market position of existing providers of Internet access services become clear.While the ILECs have repeatedly tried to portray themselves as “new entrants” in a “broadband” market dominated by cable operators, it is in fact cable operators that are new entrants in an Internet market dominated by the AOL and others.[25]/There are approximately 5.8 million cable Internet subscribers nationwide today, while AOL has 31 million subscribers and added over seven million new subscribers over the last year.[26]/While cable Internet services have grown steadily, the vast bulk of consumers continue to use narrowband telephone lines for online services.Moreover, prior to 1996, the ILECs were the primary source of broadband services, offering T-1 products to business customers.Digital subscriber line (“DSL”) service was developed in the late 1980s and Bell companies conducted limited trials with the service in the early 1990s.It is therefore clear that the Bells are not “new entrants” where broadband service is concerned.Any policy initiatives to promote competition in the Internet access market should take these marketplace realities into consideration.

C. Deployment of Broadband Services

NTIA seeks information on the current status of both the supply of and the demand for broadband services in the United States.[27]/While it has been suggested that both supply and demand pose obstacles to broadband deployment, the recent consensus appears to be that there is no problem with supply.[28]/There are actions NTIA can and should take, however, to encourage deployment and ensure that it continues to be robust -- for example working with federal land agencies, states, and localities to enhance access to federal lands and other rights-of-way by broadband providers.NTIA also can work with other arms of the Executive Branch to spur demand by supporting e-government, e-education, and telework initiatives and addressing far-reaching broadband content issues such as privacy and intellectual property.

All available evidence demonstrates that the deployment of broadband networks has been remarkable.[29]/Broadband facilities have been deployed at staggering rates in recent years, and these positive investment trends are continuing, despite the recent economic downturn.As the Administration has observed, “[b]roadband is on a faster penetration path than cable television, VCRs, CD players, and cell phones.”[30]/Over eighty percent of Americans have access to cable modem or DSL service.[31]/And virtually every home can access broadband satellite services.[32]/While the growth of fixed wireless has lagged compared to that of other broadband technologies, industry analysts believe that it has the potential to “bridge the broadband gap” and compete with other more established broadband competitors.[33]/Future developments will improve these existing technologies and also provide new means of delivering broadband services to all Americans in ways that cannot even be envisioned today.

AT&T, using multiple technologies, is among those at the forefront of deploying broadband facilities.AT&T is currently upgrading its cable plant in order to provide its subscribers with a seamless offering that includes high-speed connectivity, Internet access, and content.AT&T estimates that approximately 14 million homes passed by its cable system have been upgraded and are capable of receiving high-speed services like cable modem service.As of the end of third quarter 2001, there were approximately 1.39 million subscribers to AT&T’s high-speed cable service, nearly twice as many as at the same point in 2000.AT&T added approximately 111,000 new subscribers during third quarter 2001.AT&T Broadband plans to spend $3.6 billion on capital expenditures in 2001, with the majority focused on providing advanced services and plant upgrades.Since 1996, AT&T estimates that investments to upgrade its cable networks have exceeded $4 billion.In the third quarter of 2001 alone, AT&T spent $689 million on improvements to its cable network.

AT&T also continues to invest in DSL technology to expand its broadband facilities beyond its cable footprint.Earlier this year, AT&T paid $135 million in cash to acquire the DSL assets of the now-defunct NorthPoint Communications.These assets will be integrated with AT&T’s existing network and will allow AT&T to reach more of its customers with a broad mix of services, including broadband, local, and long distance.AT&T currently is offering an integrated voice/DSL offer in New York, and plans to extend the offer to a number of additional states next year.

Currently, however, the supply of broadband services vastly exceeds demand.According to recent reports, only ten percent of people actually subscribe when broadband becomes available.[34]/While the take rate for broadband services is rising slowly,[35]/ many industry leaders and policy makers are beginning to recognize the need to rapidly spur demand for broadband services through the development of compelling broadband applications or “killer apps.”[36]/Potential candidates include Napster’s new subscription-based model, telecommuting, and movies on demand.[37]/

While developing applications to stimulate demand is a task for which the government is particularly unsuited, there are, however, issues the Administration can address that will make it easier for industry to develop these killer apps, including privacy, security, intellectual property protection, and pricing.With regard to pricing, recent surveys show that price is a significant issue for many consumers.According to the ITAA, “32 percent of respondents with dialup Internet connections called the upgrade to faster service too expensive.”[38]/A Strategis Group survey, as reported by ITAA, found that just over one-third of online consumers would be willing to pay $25 per month for the service, but only twelve percent would be willing to pay $40 or more per month.[39]/This data demonstrates that to maximize demand for broadband services, the prices must come down and their perceived value to consumers must improve.The best way for the current administration to ensure that prices are reasonable is to promote competition in the broadband market through enforcement of the 1996 Act.

In addition to supporting industry efforts to develop broadband applications, there are other actions the federal government can take to spur broadband deployment directly.First, the government should ensure that its own procurement practices are “broadband friendly.”[40]/The government also should lead by example, using broadband applications to conduct its business and moving that business online where possible.Especially since the attacks of September 11, Internet users have come to rely upon Government websites for official information and online services.[41]/Providing more and better services online would not only increase government agencies’ demand for broadband facilities, but also would encourage more citizens to seek broadband connections in order to improve their ability to interact with the government online.This is particularly true for small businesses, who are the focus of many Commerce Department initiatives.While T-1 lines were not economically feasible for most small businesses, newer broadband services like cable modem service and DSL are clearly within their reach.Such “E-government” initiatives will provide additional benefits beyond broadband deployment, including accelerating and streamlining delivery of services to citizens, reducing paperwork burdens for businesses, and improving the management and responsiveness of joint federal-state-local programs.[42]/

The government also should promote telework initiatives that will spur demand for broadband services and facilities.For example, in order to encourage more widespread participation in telework arrangements, the government should provide employers with an annual telework tax credit based on the number of employees who telework, and employers and employees with an annual telework equipment tax credit.Similar tax incentives are included in H.R. 2597, the Broadband Deployment and Telework Incentive Act of 2001, introduced by Representatives McInnis (R-CO) and Tanner (D-TN) on July 23, 2001.NTIA should support the Broadband Deployment and Telework Incentive Act of 2001, and similar proposals that provide demand, as well as supply, incentives.

E-education initiatives provide flexible learning environments for non-traditional students and homework help to traditional ones.E-education also has the potential to rapidly increase demand for broadband services and facilities, while advancing the President’s education reform priorities.For example, the AT&T Learning Network Broadband Academy is a centralized resource of online, educational content that leverages the power of high-speed Internet access and allows teachers to take full advantage of the rich potential of broadband capabilities.[43]/Market analysts estimate that spending on e-education initiatives by companies and universities could reach $23 billion by 2004.[44]/Moreover, e-education, or “distance learning,” would help produce a national pool of graduates prepared to participate in the digital economy, provide teacher training necessary for the attainment of national standards, and provide access to enhanced educational opportunities to students nationwide, including those in rural areas.

D. Access to Broadband for All Americans

NTIA asks whether the government should adopt as a goal “access for all” to broadband services.[45]/AT&T believes that all Americans, wherever they reside and whatever their situation, should have a reasonable opportunity to access broadband services.The most effective way to achieve this goal is to remove obstacles to the deployment of broadband facilities and promote competition in the provision of broadband services by opening monopoly markets.Competition will encourage both new entrants and incumbents to broadly deploy broadband facilities in order to win new customers and retain old ones.

Although it would be premature to identify underserved areas at this time, given the immaturity of the broadband market, there are actions the federal government can take to encourage broadband deployment in areas where market forces alone might be insufficient to ensure that all Americans receive timely access to broadband services.Such actions include providing shorter depreciation lives for broadband specific equipment, targeted tax incentives, and low interest loans.For example, on November 29, 2001, President Bush signed the Agriculture Appropriations Act for 2002 into law, which includes low-interest loans designed to spur rural broadband deployment, including $80 million in direct loans for establishing more high-speed broadband Internet access in rural areas and $22.5 million set aside in a distance learning and telemedicine program specifically for low-cost loans aimed at bringing broadband and dial-up Internet access to underserved rural regions.[46]/In addition, NTIA manages several grant programs that could be targeted to address the specific needs of underserved areas.Of course, any such actions must be technology-and provider-neutral, and targeted at the companies that need them, not ILECs with a century of government-protected, subsidized, rate of return-guaranteed monopoly power.

E. Interconnection, Unbundling, and Resale Requirements of the 1996 Act

NTIA seeks comment on whether the interconnection, unbundling, and resale requirements of the 1996 Act reduce the ILECs’ incentives to invest in broadband facilities and services.[47]/There is no evidence that these pro-competitive statutory requirements discourage ILEC investment in broadband facilities and services.[48]/To the contrary, in the past five years the ILECs have made extraordinary investments in broadband facilities and services in response to competition, and today they provide more than 90 percent of residential DSL services.Verizon can currently provide high-speed service to more than half of its access lines,[49]/ SBC can bring broadband capabilities to 58 percent of its wireline customer locations,[50]/ and BellSouth plans to have over fifteen million lines capable of delivering advanced services to 70 percent of its customers by year-end.[51]/In fact, the evidence demonstrates that, after sitting on DSL technology for ten years because it would cannibalize their second line and T1 profits,[52]/ ILECs finally deployed it only in response to competitive offerings of CLECs and cable companies,[53]/ many of which would not have been possible without the market-opening provisions of the 1996 Act.

In contrast to the unsubstantiated claims of the ILECs that the interconnection, unbundling, and resale obligations discourage broadband investment, the facts demonstrate that CLECs have made “huge investments” where unbundled elements are available.[54]/AT&T alone has risked over a hundred billion dollars in local telecommunications and cable networks in reliance upon the promise of the 1996 Act.The biggest impediment to the efficient, economic deployment of broadband services is the ILECs’ monopoly control over essential facilities, and the best way to spur broadband deployment therefore is to provide access to those facilities to competitors.[55]/Only competition will provide lower prices, greater innovation, and broader deployment of advanced services.

To spur broadband deployment, therefore, the federal government should demonstrate its support for the existing interconnection, unbundling, and resale requirements.Part of this support should be ensuring that the FCC has the ability to enforce those requirements and impose the highest possible penalties for violations, efforts that would be greatly strengthened if the Bell companies were required to separate their wholesale and retail operations into different units.Genuine structural separation of a Bell company’s wholesale and retail businesses would make discrimination harder to achieve and easier to detect, thereby reducing the need for costly monitoring and oversight by regulators.A structural separation requirement would also improve the Bell companies’ incentives to act as neutral wholesalers of services and facilities, and would put all local service providers on an equal footing with respect to access to network elements, so that the success or failure of their business plans would be determined in the marketplace rather than through affiliation with the incumbent.[56]/

While NTIA expresses its concern about the “added network costs” ILECs incur if they lease network elements to competitors,[57]/ the ILECs’ own statements about the cost savings and improved profitability of broadband networks should address such concerns.SBC has boasted to investors that “[t]he network efficiency improvements alone pay for this [Project Pronto] initiative, leaving SBC with a data network that will be second to none.”[58]/Beyond those savings, of course, SBC and the other ILECs will earn substantial revenues from the new services made possible by the deployment of advanced facilities.And when ILECs make advanced facilities available to competitors as unbundled network elements, they earn yet another revenue stream from competitors who must pay the costs of these elements plus a reasonable profit.Finally, CLECs are accessing less than three percent of ILEC lines as unbundled elements,[59]/ and this number will only decrease if additional CLECs declare bankruptcy or shut down operations.The “added network costs” of unbundling are therefore vastly overstated.

The FCC’s TELRIC methodology most effectively furthers the pro-competitive goals of the 1996 Act while ensuring efficient compensation to incumbent LECs.[60]/Consistent with the directive of that Act for a pricing standard for unbundled network elements that permits ILECs to recover their “costs” plus a “reasonable profit,”[61]/ TELRIC reflects competitive market pricing by allowing ILECs to recover their full economic costs of providing network elements, including an appropriate risk-adjusted cost of capital, on a forward looking basis.[62]/In adopting TELRIC, the FCC correctly determined that an element’s forward-looking cost should reflect the cost of any efficient alternatives currently available on the market, not just alternatives that are physically identical to the facilities currently in place.As the FCC explained, such a methodology emulates rational economic behavior in a competitive market where firms consider forward-looking costs, not historical costs, in making decisions about entry, expansion and price.[63]/The vast majority of state public utility commissions voluntarily adopted the basic elements of the FCC’s TELRIC methodology as part of their implementation of the 1996 Act.[64]/

Economists across the political spectrum have endorsed TELRIC as the mostappropriate basis for determining whether rates charged to new entrants by the incumbent carriers in local markets are fair, reasonable, and efficient.[65]/As these economists, all former chief economists of the Antitrust Division of the U.S. Department of Justice, have explained, prices based on forward looking costs give the right signals to both producers and consumers to ensure the efficient use of resources.Such rates will promote cost based competitive prices for telecommunications end user services as well as competitive vitality, innovation and efficient investments in the network.And regardless of whether forward looking costs exceed historical costs (as they do for some unbundled elements) or fall short of historical costs (as they do for other elements), TELRIC-based pricing preserves the incumbent’s proper incentives to invest and innovate.

Permitting ILECs to price above TELRIC, by contrast, will deter competition and damage consumer welfare by forcing competitors to pay more than a competitive price for necessary inputs and, as a result, requiring consumers to pay elevated prices.Indeed setting unbundled element prices above TELRIC simply replicates monopoly pricing structures that choke off consumer demand, and thereby restrict investment and supply.

Despite their newfound concerns about long run incremental wholesale pricing, the ILECs themselves have consistently pressed for such a standard to govern their end user rates.The Bell companies in particular were successful in persuading regulators and courts that retail rates were reasonable as long as they exceeded “long run incremental cost” calculated under a Bell methodology, even if such rates were not sufficient to cover historic costs and the costs of outdated facilities.[66]/In situations where competitors were authorized to provide local toll and other services that depended on access to the ILECs’ monopoly facilities, ILECs urged, and regulators adopted, similar forms of this long run incremental cost method to set the pricing “floor” for the LECs’ retail services.[67]/Against this history, the ILECs cannot now be heard to argue that incremental cost prices are not compensatory.

The ILECs’ current complaints about TELRIC, in addition to being inconsistent with their earlier endorsement of long run incremental cost pricing, are completely without merit.As Professor William Baumol explains in his separate submission in response to the Notice, incremental cost is the appropriate basis for establishing rates for unbundled elements because such a standard most closely replicates the prices that would prevail in competitive markets.Properly calculated under TELRIC, these costs cover the investments required to serve the needs of buyers and the risk that anticipated demands will not materialize.

Moreover, as Professor Baumol explains, it is entirely appropriate to base TELRIC calculations on efficient costs rather than actual costs.Such a calculation simply reflects the reality that market forces dependably and invariably revalue any investment costs to the costs of available efficient counterparts of those investments, e.g., the value of a machine purchased for $1 million will fall to the price of a newer machine with the same capability.Those actual costs are the efficient costs, and any attempt to redefine “actual costs” to cover the inefficiency of some component has no relation to competitive reality. Basing network element prices on historic costs, by contrast, would perpetuate past investment inefficiencies and pass those inefficiencies on to competitors.In competitive markets, efficient decisions about market entry, exit, expansion, and contraction are made by comparing the anticipated revenue with the anticipated efficient incremental costs of the contemplated change in output.Historical expenditures, and amounts reflected on accounting books, are irrelevant to this calculus and are not appropriate to include in calculations of network element prices.

Given TELRIC’s widespread support and the utter absence of any theoretical or empirical evidence that it has deterred ILEC investment, another debate about the FCC’s decision to use it to establish UNE pricing would be unnecessary and counterproductive.Disagreements over the appropriateness of TELRIC as a competitive, efficient pricing standard have been the subject of a full airing at the FCC and at state commissions that has lasted more than five years – and these regulatory bodies have overwhelming approved its choice.Disputes over TELRIC have also been the subject of two hearings before the U.S. Supreme Court, and the Court is now on the verge of issuing a decision addressing the lawfulness of TELRIC for what is hoped will be the last time.Providing a new forum for ILEC complaints about TELRIC will only create uncertainty in the telecommunications sector, discouraging investment and making overall economic recovery and growth that much more difficult.

F. The Myth of “New” Networks

NTIA notes that some parties have suggested a “regulatory dividing line” between legacy “non-broadband” facilities and services and new broadband facilities and services, and questions whether this approach is feasible.[68]/The premise underlying such proposals is fundamentally flawed:there are not two separate sets of network elements.To the contrary, the incumbents are upgrading their networks to provide both voice and advanced services with increased efficiency.Incumbents’ investments in fiber are incremental, added to the existing network architecture.Exempting “new” facilities from the market-opening requirements of the 1996 Act would essentially put the entire ratepayer-funded network off limits to competitors, frustrating competition in voice and data.And trying to police different rules for different elements of the same network would be a regulatory nightmare.

NTIA also asks whether CLECs can continue to use “displaced” copper plant after ILECs have replaced it with broadband facilities for their own use, and if so, whether using such displaced copper plant will give CLECs a viable opportunity to offer alternative services.[69]/ILECs are aggressively replacing copper with fiber between the central office and their new remote terminals because copper plant alone is inadequate to deliver broadband services beyond a relatively limited range from a central office.Giving CLECs access solely to old copper plant would simply saddle competitors with these technological limitations and deprive them of any meaningful opportunity to offer consumers a choice.The only alternative would be for CLECs to build all of their own fiber facilities.As described below, many competitors have invested substantially in their own networks, but it is unrealistic to think that CLECs would be able to duplicate completely the ILECs’ fiber facilities in a timeframe or at the scope and scale necessary to remain competitive with the incumbents.Such a requirement would be the equivalent of a death sentence for competition.

G. CLEC Deployment of Transport, Switching, and Loops

NTIA asks to what extent competitive firms have deployed their own transport, switching, and loop facilities, and whether those investments are limited to particular geographic areas or portions of communities.[70]/The short answer is that competitive deployment has been extensive.Soon after the enactment of the 1996 Act, for instance, AT&T realized that it could not rely solely on the ILECs for the network facilities it needed to offer service.As a result, AT&T began to acquire and construct its own local networks.In 1998, AT&T purchased Teleport Communications Group for $11 billion to serve business customers.Then, in 1999 and 2000, AT&T spent nearly $90 billion to buy the cable companies TCI and MediaOne in order to have a line into the homes of residential customers.AT&T has spent billions more each year to upgrade those networks, lay fiber, and create data centers.Today AT&T has 1 million residential cable telephony customers and local business customers in 71 major markets around the country.On the wireline front, AT&T has deployed 118 local switches in 80 cities across the country to provide local service.It also has deployed over 16,000 route miles of fiber nationwide to support its provision of local service.

Even with these multi-billion dollar investments in new facilities, however, AT&T’s facilities are not ubiquitous.Its cable systems, for instance, reach less than 20 percent of all U.S. households.Consequently, AT&T needs meaningful resale and unbundled access to the ILECs’ network elements in order to provide competitive services nationwide.Allowing competitors to resell ILEC services and lease unbundled network elements to provide competitive services will ensure that all consumers enjoy the genuine benefits of competition in the “near term” by allowing new entrants to enter the marketplace and gain customers while they are building their networks.As the FCC has explained, “Congress expressly recognized that construction of redundant networks would be very costly and time-consuming, and therefore provided requesting carriers with the right to obtain non-discriminatory access to unbundled network
elements. . . .”[71]/

Resale and access to unbundled network elements are entry strategies in their own right, but they also play an important role in promoting facilities-based competition.No new entrant -- even a facilities-based competitor -- can be expected to build out a national or even a regional network before signing up customers.The market-opening requirements of the 1996 Act therefore allow new entrants to enter the marketplace and gain customers while they are building their networks.MCI and Sprint would not be in business today if they had to build out their networks before signing up a single customer.[72]/The ILECs themselves are entering the long distance business as resellers of long distance carrier services, and their efforts to undermine local resale are an example of hypocrisy in the extreme.[73]/

In the development of local competition, network elements will likewise continue to be necessary to enable a transition to facilities-based competition in all other areas of the country.rather than as a permanent solution.As AT&T recognized early on, providing competitive services through the exclusive use of ILEC network elements is neither an attractive nor a viable long-term strategy because any CLEC relying on network elements faces inherent cost disadvantages relative to the incumbent that will preclude long-term success.In particular, CLECs relying on network elements face higher costs than the ILEC because of the incumbent’s lack of any incentive to cooperate and its ability and incentive to discriminate against them.CLECs also have higher unit marketing costs and tighter margins because they must pry customers from the ILEC and price below the incumbent in order to do so.CLECs further face the substantial risk that, if they ever show signs of making substantial progress in attaining that objective, the ILEC will assert its cost advantage and price its exchange and exchange access services at levels that will limit or altogether preclude effective mass market entry by CLECs.

While the ILECs have argued that restricting CLECs’ access to network elements is necessary to spur them to deploy their own facilities, this argument is completely without merit.CLECs will always have powerful incentives to cease leasing network elements and build their own facilities wherever the economic case for doing so is even close.CLECs need to free themselves from tortured business relationships with their monopoly competitors and the endless litigation these dependencies generate, and establish a different and superior cost structure under which a long-term competitive position can be successfully maintained.Despite their rhetoric, the last thing the ILECs want is robust facilities-based competition, and their arguments opposing access to network elements for CLECs are intended to foreclose that result by eliminating the essential bridge to that goal created by the 1996 Act.

H. Broadband Cable Modem Services

NTIA seeks comment on which cable operators are currently conducting trials to evaluate giving multiple Internet service providers access to broadband cable modem services and the terms and conditions of ISP access in such trials.[74]/The first such trial in the United States was conducted by AT&T in Boulder, Colorado beginning in November 2000.[75]/This eight month trial, known as “AT&T Broadband Choice,” included over 370 participants and six ISPs.Trial participants were given a software package called the “service agent” to install on their computer, which allowed them to establish service with one or more of the ISPs and obtain technical support.The trial was divided into two phases.In Phase I, AT&T evaluated the technical and operational issues inherent in shared cable access.In Phase II, AT&T analyzed issues associated with billing and customer usage.

The Boulder Broadband Choice trial was a success and provided AT&T with useful information about the benefits that can be provided by giving multiple ISPs access to AT&T’s cable modem network, as well as problems that still need to be addressed.For example, consumers expressed satisfaction with the ease of ISP selection and registration and the customer help center and diagnostic tools.Participating ISPs benefited from their improved ability to reach new customer segments, develop new revenue streams enabled by broadband, and participate in a broadband network without significant investment.The trial also validated AT&T’s decision to use policy-based routing architectures to provide access to multiple ISPs.[76]/

On November 30, 2001, AT&T completed construction of a new network for its high-speed cable modem service.Unlike the Excite@Home network formerly used by AT&T Broadband’s customers, AT&T’s new network was expressly designed to accommodate Broadband Choice and should permit AT&T to roll out that service more rapidly throughout its HSD footprint.AT&T Broadband Choice will accommodate ISPs of any size or geographic scope, and will not impose entrance criteria or grant preferential treatment to particular providers.While there are still substantial additional steps that AT&T must take before it can complete the Broadband Choice rollout, AT&T’s objective is to complete this work by the end of 2002.In early 2002, AT&T hopes to begin a limited commercial launch of Broadband Choice in selected areas of Massachusetts.

K. The Myth of “Regulatory Parity”

NTIA asks whether it would be appropriate to establish a single regulatory regime for all broadband services, or whether there are differences in particular broadband network architectures that warrant regulatory differences.[77]/Demands for “regulatory parity” between providers of broadband facilities and services ignore important distinctions between ILECs, on one hand, and CLECs and cable companies on the other, including market power and assumed risk.These distinctions are embodied in the structure of the 1996 Act, which requires ILECs, and only ILECs, to unbundle their networks and offer interconnection at any technically feasible point.[78]/In fact, Congress considered and rejected a “regulatory parity” proposal prior to the enactment of the 1996 Act.[79]/Ignoring these differences and prematurely deregulating monopoly local telephone companies would enable these companies to leverage their control over voice services into dominance in the provision of broadband services.

In the broadband arena, ILECs argue for deregulation by comparing themselves to cable operators, which they claim face little or no regulation of cable modem service.This comparison is inapt for several reasons.First, incumbent LEC networks, especially the local loop, remain “a quintessential bottleneck facility for competing telecommunications carriers” that incumbents can, absent regulation, leverage to “perpetuate their monopolistic dominance of existing and emerging telecommunications markets.”[80]/Five years after the unbundling, interconnection, and other market-opening requirements applicable to ILECs were imposed by Congress, ILECs still control approximately 93 percent of the nation’s access lines, and 95 percent of all residential and small business lines..[81]/By contrast, cable companies face substantial competition in their core video business, and have no control over bottleneck facilities.Since 1993, the share of the multichannel video programming marketplace held by cable’s competitors has increased to 20 percent -- and four out of five new subscribers to video services now choose satellite over cable.[82]/In stark contrast, the ILECs’ persistent local exchange monopoly means that continued regulatory oversight is necessary to ensure that competitors can access their bottleneck facilities.Because cable operators do not control bottleneck facilities, there is no corresponding fear that cable operators can exclude or marginalize other video programming by the manner in which they roll out high-speed Internet access services.

The incumbents LECs’ continuing market power also gives them the ability, absent regulation, to leverage their bottleneck monopolies into nascent advanced services offered over the same bottleneck facilities.There are two ways in which unregulated ILECs could harm competitive providers of advanced services.First, an ILEC could offer bundled voice and DSL services at a price that squeezes out competitive providers of advanced services.The ILEC would simply price its unbundled voice service and its bundled voice and DSL service close enough to each other so that the difference between the two is less than the cost to its competitor of supplying the DSL service alone.To prevent this bottleneck abuse, competitive providers of advanced services must be able to get access to the part of the local loop necessary to provide advanced services at a price that allows them to compete with the advanced services offered by the ILEC.Cable operators, who face vigorous competition in pricing their multi-channel video product, have no such opportunity or incentive to leverage into advanced services, and therefore require no such regulation.

Allowing incumbent LECs to bundle basic services with advanced services provided over bottleneck facilities also allows them to squeeze out potential competitors through means other than pricing, for example by offering lower quality monopoly bottleneck services to customers of their competitors or providing quicker or more complete disclosure of their network interface specifications and protocols to favored vendors.The ability to bundle enhances the ability of incumbent LECs to “cover up” such discrimination by preventing ready comparisons between the incumbent’s treatment of competitors and its self-provisioning and by enabling the incumbent to claim that the lower price of the package allegedly stems from efficiencies made possible by close integration of the package.Regulation is necessary to ensure that competitive providers of broadband services get access to ILEC services and information as swiftly, seamlessly, reliably, and economically as when an ILEC provides such services and information to itself or a favored vendor.

In addition to differences in market power, differences in assumed risk justify different regulatory schemes for cable and incumbent LECs.Cable companies entered the market just a few short years ago with virtually no phone and few Internet customers; they essentially started from scratch and had to bear the full risks of developing and deploying cable modem services in a vigorously competitive market.The ILECs, by contrast, started with the tremendous advantages of incumbency, including control of nearly all telephone and dial-up Internet access customers.In addition, the ILECs deployed the basic infrastructure used to provide high-speed services under a regulatory regime that shielded them from competition and funded their investments with captive ratepayer charges.Incumbent phone companies faced no research and development risks with regard to the use of DSL technology – it was developed by Bell Labs in the 1980s.And ILECs can upgrade their plant one line at a time as they gain customers, while cable company infrastructure demands massive area-wide upgrade investments before a single customer in the area can be served.

Finally, despite ILEC claims to the contrary, cable operators do not operate on an “unregulated” basis.Cable companies must comply with local franchising requirements, pay billions of dollars in annual franchise fees, and often must provide free service to local governments and schools.ILECs face nothing similar.Cable companies also face the possibility of limits on the number of subscribers that they can serve, under a statutory scheme not applicable to local telephone companies.[83]/Cable companies also must provide access to their services without regard to the level of the residents’ income.[84]/ILECs, by contrast, can and do deploy broadband services where they stand to gain the biggest profits and avoid other communities that could greatly benefit from high-speed Internet access.

Incumbent LECs simply are not similarly situated with cable and other broadband providers.[85]/If and when the ILECs’ monopolies are broken and competitive local telephone markets emerge, for example, it may well be appropriate to reconsider the need to regulate access to the incumbents’ networks.In today’s marketplace, however, ILEC requests for “regulatory parity” have no sound factual or policy basis and carry the risk of devastating consequences for consumers and competition.They should be rejected by the NTIA.

L. Local Issues Affecting Broadband Deployment

NTIA seeks comment on whether there are local issues affecting broadband deployment that should be addressed by federal policies.[86]/Access to public rights-of-way and other lands is critical to the deployment of broadband telecommunications networks.Unfortunately, local authorities are slowing the rollout of broadband services and facilities by requiring potential providers to comply with burdensome local telecommunications ordinances and pay unfair and unreasonable franchise fees before they can access public rights-of-way.

In an attempt to address this problem, Congress added section 253 to the Communications Act,[87]/ which prohibits local governments from imposing barriers to the entry of telecommunications services.But an increasing number of municipalities have ignored the will of Congress and adopted ordinances that, while characterized as rights-of-way management, in fact address matters such as interconnection and universal service that far exceed the cities’ legitimate authority over public rights-of-way.They also have imposed excessive fees for rights-of-way use that are not “fair and reasonable,” as the 1996 Act requires, and bear little, if any, relationship to the burdens imposed on rights-of-way by providers of telecommunications services.

The FCC, the States, and the courts have examined these ordinances and found that many cities have overstepped the bounds of their lawful authority.[88]/Members of Congress have expressed similar concerns in recent hearings.[89]/While the law is clear, cities persist in adopting ordinances that exceed their limited authority to manage the public rights-of-way and collect compensation for such use.NTIA should issue a policy statement defining the scope of local authority that is consistent with the Communications Act and builds upon the FCC’s precedents and those of the courts.Such a policy would provide guidance to the cities, limit disputes, and spur the deployment of broadband services and facilities.

AT&T’s own efforts to deploy broadband facilities have been delayed for months, years, or even indefinitely by local authorities who have attempted to force AT&T to agree to onerous terms and conditions as a prerequisite to providing service and have denied permits and other necessary authorizations if AT&T did not acquiesce.For example, AT&T spent almost eight years negotiating with the city of White Plains, New York, for permission to deploy telecommunications facilities in White Plains.When the city refused to limit itself to reasonable rights-of-way regulation consistent with the limits of the 1996 Act, AT&T, through Teleport Communications Group (“TCG”) was forced to seek relief in federal court.While AT&T and TCG were largely successful,[90]/ almost ten years have now passed since AT&T first sought permission to use the public rights-of-way to provide telecommunications services to residents and businesses in White Plains.

Many localities recognize the benefits of competition and broadband deployment, but far too many others view new providers as a means of generating monopoly rents for use of their rights-of-way.In these municipalities, AT&T and other service providers are faced with three undesirable alternatives:agree to the municipality’s terms; be denied authorization to provide service through their own facilities; or engage in protracted negotiation and litigation to obtain reasonable terms.While section 253 in theory should prevent municipalities from engaging in these practices, local governments continue to ignore it.

Recognizing that municipal telecommunications regulation can discourage competition and prevent the development of seamless statewide networks, numerous states have taken steps to limit local governments to permissible rights-of-way management activities and prevent municipal telecommunications ordinances from usurping the states’ traditional regulatory authority over telecommunications.[91]/While these state efforts can be helpful, a state-by-state approach to reining in impermissible municipal actions is time consuming and leads to a patchwork of different regulatory regimes.Cities have also challenged these statutes as unconstitutional, tying the states up in litigation and limiting their effectiveness.[92]/

A national policy that clearly establishes the scope and substance of permissible local rights-of-way authority is vital to ensuring the future growth of facilities-based broadband services.AT&T recommends that such a policy describe permissible local activities such as regulation of the time and place of excavations, and prohibit impermissible actions that are unrelated to rights-of-way management.Specifically, this national policy should prohibit cities from regulating or mandating interconnection among carriers; regulating rates; requiring carriers to complete elaborate application forms or certify their financial, technical and legal qualifications; dictating technical standards; imposing customer service requirements; requiring universal service contributions; enforcing a carrier’s compliance with the Communications Act; requiring carriers to waive their rights under federal or state laws; or granting municipal affiliates the right to install or maintain facilities free of charge.

Moreover, any national policy should expressly state that municipalities may not impose fees for the improper purpose of raising revenues, or base rights-of-way fees on the perceived “value” of the public rights-of-way to the provider of telecommunications services.Instead, the policy should make clear that a fair and reasonable fee is one based on the burdens imposed on rights-of-way by a provider of telecommunications services or the costs a city incurs as a direct result of a carrier’s occupation of the rights-of-way.Such a policy statement would provide guidance to cities and other localities and alleviate the need for litigation on a city-by-city or legislation on a state-by-state basis, making it much easier for broadband providers to install facilities and provide services.

M. Impediments to Access to Federal Lands and Buildings

NTIA asks whether there are impediments to federal lands and buildings that thwart broadband deployment, and whether changes are necessary to give service providers greater access to federal property.[93]/Like access to state and local rights-of-way, access to federal lands is a critical component of the construction of national broadband telecommunications networks.However, attempts by certain federal agencies and departments to obtain excessive compensation for such access threatens to slow the rollout of broadband services and facilities.NTIA should take a leadership role in ensuring that the valuation methods and compensation requirements adopted by other federal agencies and departments are fair and reasonable.

For decades, private entities using rights-of-way crossing federal lands have been charged rent based on the value of the land the rights-of-way crosses and the impact of their facilities on those lands, consistent with the directives of the Federal Lands Policy and Management Act of 1976 (“FLPMA”)[94]/Recently, however, several federal agencies have attempted to deviate from this established policy.For example, in 1999 the Bureau of Land Management and the United States Forest Service attempted to abandon these established principles and institute policies that instead required compensation for use of federal lands based upon the perceived value of the land to the user.[95]/Both agencies did so without conducting a formal rulemaking, despite the fact that the changes to the rights-of-way fee schedules resulted in certain telecommunications carriers receiving fee increases of 100 to 150 times the previous year’s charges.[96]/Similarly, in January 2001, the National Oceanic and Atmospheric Administration adopted a report regarding the analysis to be used to ascertain the fair market value of a fiber optic permit in national marine sanctuaries, which drastically and unnecessarily escalated the price for such permits.[97]/

In the Interior and Related Agencies Appropriations Acts for FY 2001, Congress expressed its intent that such new fee schedules be developed only through a formal rulemaking process.[98]/In addition, because of her concerns that an improperly derived fee schedule could negatively impact the deployment of telecommunications infrastructure in rural states, especially those with a large portion of federal lands, Congresswoman Barbara Cubin (R-WY) has introduced legislation that clarifies the method that the Secretaries of the Interior and Agriculture must use to determine the fair market value of rights-of-way granted, issued, or renewed under the FLPMA in order “to prevent unreasonable increases in certain costs in connection with the deployment of communications and other critical infrastructure.”[99]/Under the bill, the “fair market value” of the use of a rights-of-way may not exceed the lowest of either the value of the land encumbered, the diminution in value of the land as a result of the rights-of-way, or the amount necessary to restore the land to its use immediately before the initial grant or issuance of the rights-of-way.[100]/The bill also requires that similar uses of rights-of-way be valued on a similar basis, regardless of the technology used or the commercial value of the services provided.[101]/

The ability of broadband providers to deploy facilities has been and will be significantly impacted by their ability to gain access to federal lands and other rights-of-way at a fair and reasonable price.The valuation method set forth in the Cubin bill balances the needs of broadband providers to obtain such access with the needs of the federal government to ensure that the federal taxpayers are fairly compensated for use of public lands.AT&T urges the NTIA to support the Cubin bill as well as reasonable rights-of-way valuation methods generally.

N. Need for Legislation

NTIA asks commenters to indicate whether any of their proposed regulatory changes require legislation, or can be made under existing authority.[102]/The policy goals proposed in these comments do not require legislation, only enforcement of existing statutes and regulations.Where specific legislation will help achieve these goals, however, those legislative proposals have been discussed in the appropriate section.

CONCLUSION

As the foregoing demonstrates, there are targeted efforts the federal government can undertake to bring broadband to unserved areas, but it can most effectively promote broadband

deployment by increasing demand for broadband services and promoting competition among companies to provide those services.Such an approach will allow a strong and healthy market for broadband services to develop, which in turn will decrease the need for government regulation in the future.

Respectfully submitted,

AT&T CORP.

__Mark C. Rosenblum_/s/_______________

Howard J. SymonsMark C. Rosenblum

Michelle M. MundtStephen C. Garavito
Susan S. Ferrel*Room 1131M1

Mintz, Levin, Cohn, Ferris, Glovsky295 North Maple Avenue

and Popeo, P.C.Basking Ridge, New Jersey07920

701 Pennsylvania Avenue, N.W.(908) 221-8100

Suite 900

Washington, D.C.20004Carol W. Wilner

(202) 434-7300Vice President - Federal Government Affairs

1120 20th Street, N.W.

Of CounselWashington, D.C.20036

(202) 457-7435

Douglas Garrett

James H. Bolin, Jr.

AT&T Broadband

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Sixth Floor

Englewood, CO80112

(303) 858-3506

December 19, 2001

*Admitted in Virginia Only.

Practicing under the supervision of the members of the Washington office of Mintz Levin.


CERTIFICATE OF SERVICE

I, Michelle Mundt, hereby certify that on this 19th day of December 2001, I caused copies of the foregoing “Comments of AT&T Corp.” to be sent to the following by first class mail, postage prepaid and by electronic mail:

 

Josephine Scarlett

Office of the Chief Counsel

National Telecommunications & 

Information Administration

Room 4713 HCHB

1401 Constitution Avenue, NW

Washington, DC20230

Michelle M. Mundt /s/

Michelle Mundt



[1]/Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications, Department of Commerce, National Telecommunications and Information Administration, Notice, Docket No. 011109273-1273-01 (Nov. 10, 2001) (“Notice”).
[2]/Removing Roadblocks to Broadband Deployment, remarks of Nancy J. Victory, Assistant Secretary for Communications and Information, U. S. Department of Commerce, to the Competition Policy Institute’s Conference,“Keeping Telecom Competition on Track” (Dec. 6, 2001).See also Building Our Broadband Future, remarks of Bruce P. Mehlman, Assistant Secretary for Technology Policy, U.S. Department of Commerce, to the NECA-NARUC Broadband Deployment Conference (Oct. 26, 2001) (“[b]roadband connections… will be vital to achieving our economic, national security, government, health, and educational goals in the years ahead.”).
[3]/See discussion infra at 18, 35-40.
[4]/See discussion infra at 15-18.
[5]/See discussion infra at 22-26.
[6]/OECD, “Telecommunications and Information Services Policies, DSTI/ICCP/TISP (2001) FINAL, 29-Oct-2001 at 15 (listing the regulatory barriers in each OECD country and suggesting the initiatives that might be taken to increase deployment rates) (“OECD Report”).
[7]/Id. at 16.
[8]/Removing Roadblocks to Broadband Deployment, remarks of Nancy Victory, Assistant Secretary for Communications and Information, U.S. Department of Commerce, to the Competition Policy Institute’s Conference “Keeping Telecom Policy on Track” (Dec. 6, 2001).
[9]/See discussion infra at 32-36.
[10]/47 U.S.C. § 251(c).
[11]/Notice at ¶ B.
[12]/Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Report, 15 FCC Rcd 20913, 20920 at ¶ 11 (2000) (“Second FCC 706 Report”).
[13]/Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Report, 14 FCC Rcd 2398, 2406 at ¶ 20 (1999) (“First FCC 706 Report”); Second FCC 706 Report at ¶¶ 10-11.
[14]/Susannah Fox and Lee Rainie, Time Online:Why Some People Use the Internet More than Before and Why Some Use it Less, Pew Internet & American Life Report at 6-7 (July 16, 2001).
[15]/Id. at 7.See also Internet Use by the Affluent (January 2001) available at <http://www.hnw.com/newsresearch/hnw_market/internet.jsp>(financial transactions over the Internet have increased and financial firms are investing in online technologies); Post-Napster Era; Sharing Music on the Internet Remains Strong -- and Free, International Herald Tribune, November 12, 2001, at 9 (reporting that file-swapping alternatives to Napster are growing more popular and are being accessed by people seeking free Internet music downloads).
[16]/In fact, most ISP authorized use policies preclude the use of servers by residential customers in order to prevent network congestion and service degradation.See, e.g., GTE WorldWind Service Frequently Asked Questions, available at <http://www.gtecablemodem.com/faq.html> (visited Dec. 11, 2001); Hawk Communications About Us, available at <http://www.hawkcommunications.com/files/about.asp> (visited Dec. 11, 2001); DSL Reports Frequently Asked Questions, available at <http://www.dslreports.com/faq/faq/4.+Using+DSL#150> (visited Dec. 11, 2001).
[17]/Patrick B. Goff, Professional Development Notes: Closing the Digital Divide in McDermitt, Nevada, 17 Economic Development Review 100, 101 (Winter 2001); see Tom Spring, Hughes Sweetens Satellite Sound, PC World.com (June 2001), available at <http://www.pcworld.com/news/article/0,aid,53506,00.asp>.
[18]/Scott SpanbauerWarp Speed Web Access: Cable vs. DSL vs. Everything Else:The latest in fast Net for 2001, PCWorld.com (January 2001), available at <http://www.pcworld.com/features/article/0,aid,35285,00.asp> (noting that DirecPC satellite service has download speeds of up to 400 Kbps but considerably slower upload speeds).
[19]/Cable Modems & xDSL FAQ, SpeedGuide.Net, available at <http://www.speedguide.net/Cable_modems/cable_faq.shtml>(visited Dec. 11, 2001).
[20]/See ADSL FAQ, DSL Forum, available at <http://www.adsl.com/about_dsl.htm>(visited Dec. 11, 2001); see also G.Lite White Paper, Orckit Communications, available at <http://www. orckit.com/glite.html> (visited Dec. 19, 2001).
[21]/Notice at ¶ J.
[22]/Compare SBC/Ameritech Online DSL Internet Center, available at <http://www.ameritech.com/DSL_new/content/0,5289,3,00.html> (offering basic residential DSL services for $49.95 per month) with BellSouth Dial-Up Internet Service Plans available at <http://services.bellsouth.net/external/serviceplans.html> (offering unlimited dial-up service for $20.95 per month) and Betsy Schiffman, Get A Cheap Second Phone Line, Forbes.com (June 7, 2001), available at <http://www.net2phone.com> (noting that the price for a second phone line ranges from $9.99 to $49.99 per month).
[23]/See Jon Van, Most Americans Unwilling to Pay Premium for High-Speed Web Access, Ecommerce Times (November 12, 2001), available at <http:www.ecommercetimes.com/perl/story/14721.html>(noting that most Americans are unwilling to pay more for high-speed services); see also Charles Piller and Karen Kaplan, So Much for the Broadband Revolution, LA Times (Dec. 6, 2001), available at <http://www.latimes.com/news/printedition/front/la-120601athome.story> (noting that the price most consumers are willing to pay for Internet access is “$20 a month -- the cost of Internet service over a standard phone line.”).
[24]/See John Borland, Dump Broadband Movement Growing, ZDNet (Nov. 7, 2001), available at <http://www.zdnet.com/zdnn/stories/news/0,4586,2823122,00.html> (reporting that as a result of the recent economic downturn, many customers are canceling their high-speed Internet subscriptions, particularly in the San Francisco Bay Area).
[25]/Top U.S. ISPs By Subscriber:Q3 2001, ISP-Planet (Nov. 2, 2001), available at <http://isp-planet.com/research/rankings/usa.html>.
[26]/See, e.g., Cable Modem Stats and Projections, available at <http://www.cabledatacomnews.com/cmic/cmic16.html> (visited Dec. 17, 2001); Worldwide AOLMembership Surpasses 31 Million, available at <http://media.aoltimewarner.com/media/cb_press_view.cfm?release_num=55252177> (visited Dec. 17, 2001).
[27]/Notice at ¶ C.
[28]/See, e.g., Removing Roadblocks to Broadband Deployment, remarks of Nancy Victory, Assistant Secretary for Communications and Information, U.S. Department of Commerce, to the Competition Policy Institute’s Conference “Keeping Telecom Policy on Track” at 2 (Dec. 6, 2001) (noting that most participants in NTIA’s Broadband Forum “agreed that broadband has been rolling out at a relatively fast pace nationally”); Second FCC 706 Report at ¶ 205 (concluding that deployment of advanced telecommunications capability is reasonable and timely, but cautioning that certain groups of consumers might be particularly vulnerable); Robert J. Samuelson, Broadband’s Faded Promise, Newsweek, Dec. 17, 2001, at 51.
[29]/See, e.g., Building a Positive, Competitive Broadband Agenda:Positively Broadband, a white paper of the Information Technology Association of America (Oct. 2001), available at <www.positivelybroadband.net> (“If deployment were the only measure, broadband would be a significant success story.”) (“Positively Broadband”).
[30]/Our Broadband Future, remarks of Bruce P. Mehlman, Assistant Secretary for Technology Policy, U.S. Department of Commerce, to the Association for Local Telecommunications Services (Nov. 30, 2001).
[31]/See The Cable Industry: Winning the Battle for Consumer Video, Data, and Voice, Industry Analysis by J.P., Morgan Securities Inc. Equity Research at 37 (Nov. 2001) (reporting that 81% of U.S. households have access to cable modem services or DSL).
[32]/See In the Matter of Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Seventh Annual Report16 FCC Rcd 6005, 6039-40 ¶¶ 66-67 (2001).; see also Spaceway, available at <http://www.hns.com/products/advanced_platforms/spaceway/overview.htm> (noting that advanced satellite services are now available “to everyone, everywhere”).
[33]/MMDS Fixed Wireless Set to Become a Piece of the Broadband Puzzle, E-Networks & Broadband Access Report by the Yankee Group at 2 (July 2001).
[34]/See Ernie Bergstrom, Mike Paxton and Michelle Abraham, The Broadband Marathon:Access Technologies Jockey for Subscribers, Cahners In-Stat Group Report at 3 (June 2001) (“Cahners Report”); see also Commissioners See Limited FCC Role in Broadband Buildout, Communications Daily, October 29, 2001 (noting that recent research indicates that take-rate for broadband services among U.S. customers is close to 10 percent).
[35]/See Cahners Report at 44 (noting that worldwide subscriber rates for broadband services are growing slowly).
[36]/See, e.g., Peter Henderson, AT&T Says Broadband Services Still a Tough Sell, Reuters (Aug. 21, 2001) (quoting FCC Commissioner Kathleen Abernathy that “[t]here is no great crisis in broadband deployment….You are really looking for the killer applications to spur take rates by consumers,”); Changing the Tone and Charting the Future of Regulation in a Broadband World, remarks of W. Kenneth Ferree, Chief, FCC Cable Services Bureau, to the 21st Annual Conference of the National Association of Telecommunications Officials and Advisors at 6 (Sept. 9, 2001) (noting that “there are very few true broadband applications driving subscriber acceptance and, as a result, the dial-up connection has become the de facto standard”); Positively Broadband at 4-5 (urging federal and state governments to implement policies designed to facilitate the deployment of broadband services).
[37]/See, e.g., Disney, Fox Seen Making Video on Demand Move, Reuters (Aug. 28, 2001), available at <http://www.zdnet.com/zdnn/stories/news/0,4586,2808503,00.html> (discussing expected announcement of video-on-demand initiative); Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios, and Warner Bros. Announce On-Demand Movie Distribution Service, Sony press release (August 16, 2001), available at <http://www9.station.sony.com/sca/press/08162001_pf.html>.
[38]/Positively Broadband at 10.
[39]/Id.
[40]/Because deploying broadband services and facilities requires extensive upfront planning and capital allocation, government contracts need to be binding in order to ensure that carriers are assured an adequate return on their investments.
[41]/See William Matthews, FirstGov to Undergo Overhaul, Federal Computer Week (Dec. 10, 2001).
[42]/News Release, Office of Management and Budget, OMB Outlines New Federal E-Government Strategy: 23 Initiatives Will Help Improve Customer Services and Efficiency (October 25, 2001).
[43]/See, e.g., The AT&T Learning Network Broadcast Academy Web Site, at <http://www.att.com/learningnetwork/broadband/index.html>(visited Dec. 19, 2001).
[44]/Michael Pastore, Companies, Universities Moving Toward E-Learning, CyberAtlas (April 2, 2001), available at <http://cyberatlas.internet.com/markets/education>.
[45]/Notice at ¶ D.
[46]/Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2002, Pub. L. 107-76 (2001).
[47]/Notice at ¶ E.
[48]/SeeOECD Report at 15-16.In fact, in the rural areas where DSL deployment has been the slowest, most carriers are by and large exempt from the 1996 Act’s unbundling requirements under section 251(f).
[49]/Press Release, Verizon Communications Inc., Verizon Communications Reports Solid 3Q Earnings And Provides Outlook for Remainder of 2001 at 3 (Oct. 30, 2001).
[50]/SBC Reports Third-Quarter Results, SBC Investor Briefing at 5 (Oct. 22, 2001).
[51]/Bell South Reports Third Quarter Earnings, Bell South Investor News at 2-3 (Oct. 18, 2001).
[52]/Reinhardt Krause, Regional Bells Feel Hemmed In They’ve Fought Off Upstart, but Cannibalize Themselves with New Services, Investors Business Daily, Nov. 19, 2001.
[53]/See In the Matter of Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, CC Docket No. 98-148, Report, 14 FCC Rcd 2398, 2419 ¶ 42.
[54]/See letter from William J. Baumol, Professor of Economics, New York University et al. to the Honorable Donald L. Evans, Secretary, U.S. Department of Commerce of Dec. 12, 2001, attached hereto as Attachment A.See also OECD Report at 15-16 (citing ALTS, “The State of Local Competition 2001” (February 2001), available at <http://www.alts.org/Filings/022001Annual Report.pdf>.
[55]/Id.; see also Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions:Seventh Annual Report on the Implementation of Telecommunications Regulatory Package, COM(2001)310 final at 18-22 (finding that one of the keys to competitive broadband access is opening up the local access network and recommending that the process be “speeded” up through “hands-on monitoring,” “the setting of binding deadlines and the imposition of credible financial penalties on incumbents not complying with the requirements imposed”).
[56]/Separation of the Bells’ retail and wholesale businesses would be required by S. 1364, theTelecommunications Fair Competition Enforcement Act of 2001, recently introduced by Senators Hollings, Stevens, and Inouye.
[57]/Notice at ¶ E.2.
[58]/SBC Investor Briefing, SBC Announces Sweeping Broadband Initiative, at 2 (Oct. 18, 1999).
[59]/SeeTrends in Telephone Service, Common Carrier Bureau, Federal Communications Commission, August 2001 at Table 9-4 (demonstrating that CLECS are accessing approximately 2.7% of ILEC lines as unbundled network elements).
[60]/See Notice at ¶ E.4 (asking about the “principal strengths and weaknesses” of TELRIC).
[61]/47 U.S.C. § 252(d)(1).
[62]/See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 FCC Rcd 15499, 15816-59 at ¶¶ 627-707 (1996).
[63]/Id. at ¶¶ 635, 694-98.
[64]/See P. Huber et al., Federal Telecommunications Law § 2.4.4.1, at 185 (2d ed. 1999).
[65]/Letter to Hon. Reed E. Hundt from Messrs. Bruce Owen, Lawrence J. White, Frederick R. Warren-Boulton, Bobby Willig, and Janusz A. Ordover (Dec. 2, 1996).
[66]/See, e.g., MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1123 (7th Cir. 1983); Private Line Rate Structure Guidelines, 97 FCC 2d 923, 945-46 ¶¶ 36-37 (1984); C&P Tel. Co., 70 Md. P.S.C. 341 (Md. P.S.C. 1979).
[67]/See, e.g., Implementation of § 13-507 of the Public Utilities Act, 162 P.U.R.4th 649 (Ill. C.C. 1995); Competition in the Local Telecomms Market, slip op. at 30 (La. P.S.C. Mar. 15, 1996); Washington Utils. & Transport Comm’n v. US West Communications, Docket No. UT-950200, slip op. at 81-87 (Wash. U.T.C. Apr. 11, 1996).
[68]/Notice at ¶ F.
[69]/Notice at ¶ F.2.
[70]/Notice at ¶ G.
[71]/See Public Utility Commission of Texas, 13 FCC Rcd 3460, 3498 (1997).See also “Why ADCo?Why Now?An Economic Exploration Into the Future of Industry Structure for the ‘Last Mile’ in Local Telecommunications Markets,” Phoenix Center Policy Paper Number 12 (Nov. 2001), available at<http://www.phoenix-center.org/pcpp/PCPP12.pdf> (describing policy basis for imposing unbundling obligation on ILECs in order to accelerate the pace of competition).
[72]/See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, 11 FCC Rcd 15499, 15509 ¶ 12 (1996) (noting that MCI and Sprint entered the market by relying solely on the resale of incumbent services).
[73]/See, e.g.FCC Okays SBC Sec. 271 Petition Amid Concerns About DSL Resale, Communications Daily, Nov. 20, 2001 (noting that SBC will use Williams Communications’ network to provide long distance services in Arkansas and Missouri, as it currently does in Kansas, Oklahoma, and Texas); Verizon Communications, Credit Suisse First Boston Corporation Equity Research Report (June 6, 2001) (“Sprint carries most of Verizon’s long distance voice calls at very attractive wholesale rates.”).
[74]/Notice at ¶ H.
[75]/See also Leslie Ellis, Anatomy of a Trial: Boulder, Broadband Week at 2 (October 2000), available at <http://www.broadbandweek.com/news/0010/0010_news_openside.htm>.
[76]/Ordinarily, routers direct Internet data “packets” by reading destination data from each packet’s header.Because routers customarily assume that all traffic reaching them should be routed to a single ISP, there is no need for the routers to also read a customer’s source data associated with each packet.However, when cable Internet service is provided in a multiple ISP environment, source data is required so that packets can be routed to each customer’s ISP.AT&T’s Broadband Choice trial tested a new “policy-based routing” scheme that read source information in packet headers to correctly direct each user’s traffic.
[77]/Notice at ¶ K.
[78]/47 U.S.C. § 251(c).
[79]/See, e.g., “Stevens Draft Includes ‘Title VII’ Provision; Senator Hopes to Include Language in Other Bills,” Telecommunications Reports (Apr. 18, 1994) at 1-2; “White House Working to Include ‘Title VII’ in Telecom Bills; Hollings Says Provision ‘Isn’t Realistic At This Time,” Telecommunications Reports (February 28, 1994) at 4-6.Under one version of this proposed framework, all providers of “advanced” services would have been subject to similar access and interconnection obligations.See “NARUC Adopts Package of Legislative Resolutions to Guide Negotiations on Fast-Moving Telecom Bills,” Telecommunications Reports (Mar. 7, 1994) at 10-15 (describing specifics of proposed Title VII and NARUC’s opposition thereto).
[80]/FCC Brief for Respondents at 22, WorldCom Inc. v. FCC (D.C. Cir. filed Nov. 2, 2000) (No. 00-1002).
[81]/See Trends in Telephone Service, Common Carrier Bureau, Federal Communications Commission, August 2001 at Table 9-1; see also Robert E. Hall and William H. Lehr, Rescuing Competition to Stimulate Telecom Growth at 14 (September 28, 2001), available at <http://www.techcentralstation.com/images/pdf/hlpaper.pdf> (reporting that the ILECs control 95 percent of residential and small business lines).
[82]/See Cable, DBS and Other Video Players Square Off Over Regulations, Warren’s Cable Regulation Monitor, Sept. 18, 2000, at 2 (reporting that “four out of 5 new pay TV customers now go to satellite” over cable); see also Satellite Challenging Cable Companies for TV Viewers, Washtech (Aug. 8, 2001), available at <http://www.washtech.com/news/netarch/11722-1.html> (noting that satellite services are “stealing away hordes of consumers”).
[83]/47 U.S.C. § 533(f)(1).
[84]/47 U.S.C. § 541(a)(3).
[85]/OECD Report at 4 (finding that “[a]rguably cable operators are in a less dominant position than incumbent telecommunications carriers” and “[a] case can be made for not subjecting new cable infrastructure to open access policies particularly where new entrants have little market power.”).
[86]/Notice at ¶ L.
[87]/47 U.S.C. § 253.
[88]/See, e.g., AT&T Communications of the Southwest, Inc. v. City of Dallas, 52 F. Supp. 2d 756, 760 (N.D. Tex. 1998) (“the management of and requirement of fees for use of the City’s rights-of-way,” set forth in Section 253(c), is “the only remaining role of local government.”); BellSouth Telecom, Inc. v. City of Coral Springs, 42 F. Supp. 2d 1304, 1309 (S.D. Fla. Jan 25, 1999) (a city “can only” manage its rights-of-way); Bell Atlantic-Maryland, Inc. v. Prince George’s County, Maryland, 49 F. Supp. 2d 805, 817 (D. Md. 1999) (invalidating ordinance because it exceeded rights-of-way management authority, created substantial and unlawful barrier to entry, and permitted county to base approval on issues that “go well beyond the bounds of legitimate local governmental regulation.”); TCI Cablevision of Oakland County, Inc., 12 FCC Rcd 21396 at ¶ 105 (1997), aff’d, 13 FCC Rcd 16400 (1998) (warning municipalities against imposing “a redundant ‘third tier’ of telecommunications regulation” on telecommunications providers at local level because of likelihood such requirements will impede competition and impose unnecessary delay on new entrants).
[89]/See House Rules Panel in Consultation on Tauzin-Dingell Options, Communications Daily, November 29, 2001 (describing Rep. Wilson’s comments regarding impermissible state and local government fees for use of rights-of-way).
[90]/See TCG New York, Inc. v. City of White Plains, New York, 99 Civ. 4419 (S.D.N.Y. 2000), appeal pending, TCG New York, Inc. et al. v. White Plains, Nos. 01-7213(L), 01-7255(XAP) (2d Cir.) (finding that “the requirements imposed on TCG by the City and the ordinance, when viewed as a whole and in context, have the effect of prohibiting the ability of TCG to provide telecommunications services.”).
[91]/See, e.g., Colo. Rev. Stat. §§ 38-5.5-101-108; Fla. Stat. ch. 364.0361, 337.401; Mich. Comp. Laws §§ 484.2251-2253; Minn. Stat. §§ 237.162-163; Ohio Rev. Code §§ 4939.02-03.
[92]/See, e.g., Complaint for Declaratory and Injunctive Relief, City of Dublin and City of Upper Arlington v. Ohio (Ct. Common Pleas, Franklin County filed Aug. 25, 1999); TCG Detroit v. City of Dearborn, No. 98-803937 (Mich. Cir. Ct., Wayne County March 8, 1999).
[93]/Notice at ¶ M.
[94]/43 U.S.C. § 1701.
[95]/See e.g. U.S. Needs to Reform Right-of-Way Policies, Officials Say, Communications Daily, December 6, 2001 (noting that the Bureau of Land Management and the United States Forest Service are imposing substantial rights-of-way fee increases on companies installing fiber optic lines).
[96]/See e.g. News Release, TelROW Applauds Introduction of Reasonable Fees Act, Hopes for Clearer Policy on Federal Lands Rights-of-Way (November 9, 2001) (noting that arbitrary revisions to right-of-way rental fee schedules led to fee increases of 100-150 times more than fees imposed prior to the changes); Capitol Hill, Communications Daily, April 17, 2001 (reporting that federal agencies deviated from the fair-market valuation standard without providing an opportunity for public comment).
[97]/“Fair Market Value Analysis for a Fiber Optic Cable Permit in National Marine Sanctuaries,” National Oceanic and Atmospheric Administration Office of National Marine Sanctuaries, 66 Fed. Reg. 1092 (Jan. 5, 2001).
[98]/See Department of the Interior and Related Agencies Appropriations Act, 2001, Pub. L. 106-291 at § 340 (2000).
[99]/H.R. 3258, 107th Cong. (2001).
[100]/Id. at § 2.
[101]/Id. at § 3.
[102]/Notice at ¶ N.