October 19, 2004 8:55 AM PDT

Powell: Feds must use light touch on Net

BOSTON--Government must regulate both lightly and carefully to encourage the expansion of broadband infrastructure and applications such as Net phone calls, the Federal Communications Commission's chairman said Tuesday.

Speaking at the Voice on the Net conference here, Michael Powell reiterated his perspective that the government should not rush to create rules without understanding their long-term effects on new industries. Central among these issues is the growth of super-fast fiber-optic data lines to the home and the rush among large and small companies to offer Net phone services.

"It will take a year to get a rule on; it will take 25 years to ever take it away if it's wrong," Powell said, addressing a question about whether carriers would restrict access to content.

For fiber build-outs, Powell warned that there must be a "delicate balance" between sparking competition and creating a monopoly over new access lines. He was referring to recent FCC rules that eased the regulations on Baby Bell phone companies offering services on fiber lines versus on their existing copper infrastructure. Copper lines are currently regulated by the Telecommunications Act of 1996, which requires the companies to open their lines to competitors.

For the Bells, fiber is considered a critical competitive weapon against cable companies such as Comcast and Time Warner Cable. The Bells have suffered losses from their core landline customers, who have defected to wireless services and cable packages that bundle broadband Internet, voice and video. Since fiber offers significantly more bandwidth than copper or cable, the FCC is trying to give Bells the incentive to build fiber lines to residences.

Verizon Communications has plans to stretch its fiber lines to 1 million homes by the end of the year and to 3 million by the end of 2005. The Baby Bell will soon offer video to compete with cable and offer faster Internet service for a comparable price to cable.

Other Bells--BellSouth, SBC Communications and Qwest Communications International--are sticking with copper access to homes but extending fiber to neighborhood nodes. These companies assert that upgrading their copper lines with faster DSL technology, such as ADSL 2+, will offer a faster means of providing video to their customers.

However, Powell warned that opening the doors for one industry is dangerous, citing the government's decision at the turn of the last century to let AT&T control all telephone lines in exchange for building the network.

 

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