FCC, Big Telcos Take Aim At Line Sharing Rules In Bid To Further Hamstring Broadband Competition

from the more-of-the-same dept

So you might recall that part of the Telecommunications Act of 1996 was the concept of line sharing, or local loop unbundling. Simply, the rules set forth by that law required that incumbent telcos needed to share their networks with smaller competitors, providing wholesale access to bandwidth. It was an effort to foster something vaguely resembling competition in the broadband space by letting smaller companies piggyback on existing network infrastructure. The thought was that because the barriers to market entry were so high, this could help smaller competitors gain footholds that would otherwise be impossible.

Unsurprisingly incumbent telcos utterly loathed this idea, and quickly got to work dismantling it. First by ensuring that the coordination between incumbent telcos (ILECs) and smaller competitors (CLECs) was as clunky, cumbersome and annoying as possible (something you probably noticed if you ever waited for installs from one of these smaller ISPs in the late 90s or early aughts), then by lobbying to have the rules dismantled. Incumbent telcos then used the resulting failure as evidence that the idea was doomed from the start, despite the fact we never truly gave it a chance.

The idea of opening incumbent networks to competitors is pretty common in some parts of the world. France for example managed to take the same concept and made it work quite successfully in cities like Paris, where to this day users can get TV, phone, and 100-500 Mbps broadband connections for a tiny fraction of what American consumers pay ($40 to $50 or so). A variation on this theme is open access, where multiple ISPs come in and compete over a core (sometimes government co-run) network; an idea that works well here and abroad, but also sees fierce incumbent ISP opposition for obvious reasons.

It’s a battle incumbent telcos won handily thanks to lobbying power, but there remains a few lingering rules they’re now trying to eliminate. As such, they’ve been petitioning the Ajit Pai FCC to eliminate the remainder of these rules. In a blog post by telco lobbying organization US Telecom, telcos argue that the rules are no longer necessary, and (much like their attacks on net neutrality) argue that eliminating them will drive “innovation and investment”:

“This month, USTelecom is petitioning the FCC for nationwide forbearance from rules created in 1996 that no longer make sense in today?s marketplace. Specifically, the petition focuses on unbundling obligations, which require some ILECs (incumbent local exchange carriers, a.k.a. local telephone companies) to sell access to parts of their networks to certain competitors at extremely low rates set by regulators.

These outdated rules distort competition and investment decisions. When outdated and overly restrictive regulations are rolled back, innovation and investment thrives. And for over two decades, the broadband industry has transformed how the world communicates under a light-touch regulatory structure that spurred over one and a half trillion dollars in private investment.”

Unsurprisingly the smaller companies that are still using those lines don’t see the rules in the same light. Independent California ISP Sonic, for example, is one of the last surviving independent ISPs from that era. Sonic argues that they still need access to these networks as they slowly work to build out a fiber network of their own, and gutting the remaining rules is simply an attempt to further constrain what passes for competition in American broadband markets:

“Sonic is fully engaged in the process of building fiber to customers in a number of markets around Northern California, but this represents a serious impediment to our ability to deploy fiber,” says Sonic CEO Dane Jasper of the group’s petition.

“The 1996 Telecommunications Act created competition in the telephone and broadband marketplace by requiring incumbents to unbundle essential last mile facilities, primarily copper wires that go to premises,” Jasper says. “Serving customers on these facilities is an essential step toward fiber deployment, which Sonic is actively engaged in.”

“However, we cannot lose access to copper in the meantime,” Jasper said. “The cut-off of unbundled network elements as contemplated by US Telecom is an audacious attempt at limiting new fiber deployment by competitive carriers including Sonic, and it would directly harm hundreds of thousands of California consumers and businesses who we currently provide high-speed services using UNE copper facilities and backhaul.”

The EFF also has a good blog post explaining why these rules are still important:

“While copper wire infrastructure may strike people as the infrastructure of yesterday, its existence and the legal rights to access it remain essential for competitive entry into the high-speed broadband market. This is because it is one of the only remaining ways a new company can gain customers to then leverage to finance fiber optic deployment. Should the FCC grant the petition, the growing monopolization of high-speed broadband above 25 Mbps where more than half of Americans have only one choice will likely become worse.”

And while this isn’t a story that’s going to get much (any) real attention in the midst of so many other pressing issues, it’s important all the same. Especially for a broadband market that’s actually getting less competitive than ever thanks to these same telcos routinely refusing to upgrade their own networks, providing giant cable companies like Comcast a growing monopoly over an already uncompetitive broadband sector.

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Comments on “FCC, Big Telcos Take Aim At Line Sharing Rules In Bid To Further Hamstring Broadband Competition”

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Anonymous Coward says:

dumb politicians

** “… law required that incumbent telcos … share their networks with smaller competitors..”

So the real lesson here is that dumb government politicians wrote a stupid law that fails miserably … because those dumb/arrogant politicians (and their supporters do not understand how the real world works.

However, those dumb politicians will stupidly conclude that they merely need a bit better arrangement of ink-on-paper (law) … to fix things and bring back market competition. They never realize their fundamental ignorance and inability to control dynamic economic activity… nor that their ignorant meddling makes things worse.

Gary (profile) says:

Re: Re: Re:3 dumb politicians

Yes, regulate Properly seems like the most reasonable change.
Looking to other countries that have better broadband service, they have line sharing. This requires government regulation. Natural monopolies tend to need regulation.
It has been shown to work, so you can’t say this is a magical fiction.

PaulT (profile) says:

Re: Re: Re:4 dumb politicians

Indeed. There’s a weird, regular trend of Americans insisting that something is impossible to achieve despite it visibly working in most other developed countries.

I can never help laughing when people say that the existence of regulation is the problem, since all they are there to achieve is to prevent these corporations from screwing you however they want. The fact that it’s not preventing them from doing this in the US is a reason to improve it, not to make it so that the corporations don’t have to pretend they’re not screwing you any more.

Anonymous Coward says:

Re: Re: Re:5 dumb politicians

It would take literally a cultural revolution before the de-regulation forces, which have controlled the US government for the last half-century, might be defeated or at least pushed back. Corporations today are more powerful than they’ve ever been since the 19th century, particularly the biggest corporations, and that’s not likely to change in the foreseeable future.

Anonymous Coward says:

Re: Re: Re:6 dumb politicians

No, there needs to be a culture shift in both sides.

We have been trying it your way for the past 8 decades. I think we are well past the point of it’s not going to work your way. No matter how much PaulT likes to compare apples and oranges. Our government does not work the same way as his and his constant mouth breathing over the situation is not helping. All he can do is say “we have it better” and he is right but its also a pointless and meaningless effort. If our government ran the same way as his then PaulT might have something of merit to add to the situation but he does not. He only has a head full of air and a mouth to heat it with.

Anonymous Coward says:

Re: Re: Re:7 dumb politicians

Your time frame is deficient. 8 decades ago would be the 1930s, when there was indeed a whopping dose of new government regulation. However, the 1980s reversed that, spawning a new era of blanket de-regulation that in many ways sent the country back to the 1920s. Coincidentally, both the 1920s and 1980s ended with a scandal of massive investment fraud.

Also your post would suggest that you’re trying to see how many trollish taunts you can squeeze into a single post that says little else.

PaulT (profile) says:

Re: Re: Re:7 dumb politicians

“All he can do is say “we have it better” and he is right”

Cool, glad to see you admit it. It’s interesting that you can’t even do that without throwing out half-assed insults, and also sad that you are still trying to blame government for you being screwed as a consumer b y non-government entities. But, at least you’re no longer accusing me of lying when I direct you to the benefits that effective regulation can bring.

But, yet again – what is your solution? I’m only here to counter the lies that regulation either cannot work or is somehow directly responsible for corporate action.

Anonymous Coward says:

Re: Re: Re:4 dumb politicians

Looking to other countries that have better broadband service, they have line sharing. This requires government regulation.

Technically it doesn’t, and it would be great to see some company like Sonic allow third-party access to their lines (with reasonable terms) voluntarily. Google Fiber was going to be Open Access originally, until they changed their minds.

Anonymous Coward says:

Re: Re: Re:4 dumb politicians

I fought this fight with PacBell, they pulled their fiber out of the street here when the law took effect!
They sent technicians to this house multiple times and took off the P.O.T. load resisters, than my new ISP mailed back my cashiers check, no sharing was going to happen for little guys.
When i bought 21 phone lines, two ISDN’s and a T-1 from XO at another location, PacBell pulled in a special new cable for just that week!
Telcos are required to sell dark lines by the shortest possible route, AT&T tripled my route through their CO office two miles in the other direction from isi.edu
A year later i ordered five lines here at the house (for the Coalition of Immokalee Workers), the minimum number of telephone lines from XO. The sharing of the last mile was a joke for any real competition; When GTE gave up competing in this area, i telephoned the CPUC the day after Christmas… The Commissioner answered and i conned him into having a public meeting before GTE bailed.
When the California ‘Blue Book’ deregulated electric power generation in 1996, in spite of the law, the only ‘co-generator’ in California was a petroleum mining ‘Flaring’ unit; BUILT by a power Co. retired executive!
Capitalism is 90% one big lie after the other, no law against lying.

James Burkhardt (profile) says:

Re: Re: Re: dumb politicians

Local control of taxpayer funded infrastructure (I.e. all broadband deployment) following models seen in the rest of the world to limit the negative impacts of infrastructure monopolies, created largely by high costs of infrastructure, by enforcing the separation of infrastructure and Service layers.

So, whats your solution to overcome issues with high costs of deployment of the infrastructure?

Anonymous Coward says:

Water company

Holy shit !!!! besides just charging for water we can charge extra foe which tap it comes out of ??????

Broadband company
Holy Shit !!!! besides charging for ones and zeros we can charge extra for them in a different order but same size

Water customer
FUCK YOU one main in , I get to decide how I use it .

Broadband customer
I’m Fucked because politicians are greedy scumbags

Anonymous Coward says:

"extremely low rates set by regulators" is NOT "competition"!


EVERY "business model" from Techdirt has one point in common: A SUBSIDIZED OR EVEN FREE RIDE for favored corporations. Whether it’s Napster using music, GOOGLE stripping headlines (besides 11000 lines of code from Oracle!), Kim Dotcom gaining money from advertising with draw of infringed content, or Aereo using CBS’s content, EVERY TIME, Techdirt’s plan is for those who pay the money, time, and creativity to be ripped off.

Anonymous Coward says:

Re: "extremely low rates set by regulators" is NOT "competition"!

Please explain how wholesale and is a subsidy. Personally, I think all lines on public telephone poles need to be owned by the county. Then everyone can just pay wholesale to the county. I already pay wholesale prices to the county for fiber runs and find that they are infinitely better at support.
Napster was a missed opportunity by the RIAA and MPAA. Now others like spotify and netflix took up the slack.
Google stopped pulling headlines in Spain and the news agency their lost money because of it. Didn’t take them long to realize that Google was already sending them money due to traffic.
Kim’s raid was illegal which was the problem.
Aereo only changed the location of the connection and streamed it. Still had to pay the same fees to the provider. Tech luddites making decision about tech progress.

Anonymous Coward says:

Re: "extremely low rates set by regulators" is NOT "competition"!

That’s quite a laundry list of unrelated subjects you’ve chosen to cough out. Allow me to create a connection …

Back during the “Napster era” there were many independent DSL providers, some of which chose to stand out from the crowd by advertising their ISP service as “anonymous” — in other words they didn’t keep logs. Big ISPs like Comcast-NBC-Universal would no doubt consider such a feature to be a conflict-of-interest for them, so only a small independent provider (with no direct financial ties to Hollywood) would even dream of considering such a proposition.

So an argument could be made that the more competition there is among ISPs, the more likely market forces will push the industry toward servicing the actual needs of customers, such as protecting their privacy (even if those needs sometimes include infringing copyright without being caught and taken to the cleaners).

PaulT (profile) says:

Re: Re: Re:

“That’s quite a laundry list of unrelated subjects you’ve chosen to cough out”

Facts are indeed hard for this one.

I don’t recall Napster being promoted here as a business model, except by those who obsessively lie about what’s written. I do remember it being pointed out that the underlying technology they were trying to outlaw has a multitude of legitimate uses, and that the lack of legal online options / requirement to buy overpriced albums just to get the one song you wanted were the root cause of the piracy. In fact, the only business model I recall being discussed was the failing one being clinged to by an outdated industry, not the one of the company who provided a tool to get what they refused to offer. The major concern was that the case was trying to get perfectly legal technology outlawed just because it can be used for piracy. Technology that the things currently making the entertainment industry a lot of money requires.

Megaupload also had numerous legal uses, including from artists who used it to share their own work. But, again, the theme was not support of their business model, but the criticism of the way the whole raid and lack of due process went. Any support of the business before that was merely pointing out that it was used for many legal activities.

Aereo, if I’m not mistaken, believed that they were operating legally (though possibly through loopholes), and did actually try negotiating licence fees before they had to shut down.They also, once again, were simply offering what the industry in question was unwilling to provide.

Google News is the most hilarious addition to his list, given that publishers in Germany demanded that they be forced to let them back on the service when they realised how much money they were losing without it. Also, the headlines are publicly available and publishers are provided the exact tools they need to stop being listed if they wish. But, he is obsessed with that company for some reason, even though he can’t get basic facts correct (although Oracle are the ones suing, they did not own Java at the time of the infringement and so nothing was taken from them).

Meanwhile, in the real version of this site, the business models that are generally supported here are things like Netflix, Spotify and others that succeed in giving people what they wish to pay for, despite being held back at every opportunity by the very industries they make money for. Business models that are constantly under attack by people who thing that a one time rental and a purchase should have the same price tag.

ECA (profile) says:

I wonder..

Its always entertained me that ???? Laws and regulations are voted on BY THE PEOPLE..
And ??? laws and regulations ARE NOT..

THEN there is the idea that the laws and regs are SUPPOSED to be FOR THE BETTERMENT of society..??

Then there is the CORP ideal of “HAVE IT OUR WAY”(not burger king)..
And (even under Ajit) we have Proof that the Corps can make IT SEEM…that the world is willing to pay MORE..

I could get into an old conspiracy, but wont..

That Anonymous Coward (profile) says:

“These outdated rules distort competition and investment decisions.”

What competition?
If we had an agency that actually provided oversight and enforcement we’d have enough anti-monopoly & price fixing lawsuits to keep the courts busy for the next 500 years.

What investment?
Spending more money on misleading commercials offering speeds up to 100* but delivering much lower because no one has the power to punish this deceptive behavior.

*- it could be 1MBs but we have a labe report that if we spent a bunch of money & upgraded things we could hit 100 on these lines but we like our bonuses to much to do so.

The Wanderer (profile) says:

Re: Re:

Oh, they’re right on that first point: these rules do distort competition.

It’s just that what they distort it from is the state of monopoly and/or oligopoly to which these things naturally devolve (the similarity to the term "natural monopoly" may, in fact, not be a coincidence), and what they distort it to is a situation in which there is more competition between providers (because there are more providers to be able to compete).

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