FCC changes rules over DSL and broadband competition

The FCC decided on the 5th of August that wireline broadband Internet access services are information services, and according to the US telecom act, and this implies a much lower degree of regulation on their providers. In particular, it relieves them from the obligation to unbundle the transmission components and grant access to other ISPs.

Comment: With this decision, the FCC has levelled the paying field for RBOCs, granting them the same degree of freedom that cable companies gained from the 'Brand X' decision the US Supreme Court in May this year.

This is a big hit on independent ISPs. They have a one-year transition period during which they still will be able to use existing facilities from facilities-based provider. But they have to completely re-think their business and their role in today's US broadband market.

The decision comes as no surprise. After the May Supreme Court decision, incoming FCC chairman Kevin Martin made it clear that he wanted to create same regulatory conditions for the telecom companies. The only surprise is the swiftness with which this new decision was taken and its unanimity amongst FCC commissioners.

The FCC's overriding belief is that there is no need to grant access in a multi-platform world, because consumers can chose in between different facilities-based broadband providers deploying different and competing technologies. Close to six broadband connections out of ten in the US are provided through cable, while DSL covers the rest, and overall broadband penetration is 12%.

In the major European countries, broadband penetration is similar to the US, but the regulatory approach is going in the opposite direction because multi-platform competition is a rarity and cable operators are few. European regulators are therefore forcing incumbents to provide infrastructure elements and wholesale DSL services, such as bitstream offers, to facilitate market entry. The aim is to encourage ISPS to gradually deploy their own infrastructure, and then compete against the incumbents once they have the strength (the so-called ladder of infrastructure-investment paradigm).

Two completely different regulatory approaches, and so far similar outcomes in term of penetration, offers and innovation (though the US is slightly more dynamic particularly in the area of voice over broadband). While it will be interesting to see who wins this 'regulatory game', new access technologies (like Wi-max) always have the disruptive power to reshape once again the broadband market scenario.