Ness Reflects On FCC Time
from the April 16, 2001 issue of Broadband Week
WASHINGTON--President Clinton appointed Susan Ness to a Democratic chair on the five-member Federal Communications Commission in 1994 and reappointed her for a second five-year term in July 1999. The Senate Commerce Committee held hearings on her renomination in March 2000, but the Republican-controlled Senate never confirmed Ness, who after George W. Bush's election said that she would not be seeking reappointment. Commissioner Ness recently spoke with Broadband Week about telecom regulation and some of the changes taking place at the FCC.
BW: How do you see the election of President Bush and appointment of Chairman Powell changing the FCC's approach to stimulating broadband deployment?
Ness: I am pleased to be working with Chairman Powell whom I worked with over the last three years. He is a delightful, thoughtful individual who cares about communications policy and following the law. The 1996 Telecommunications Act has a section 706, which is responsible for making sure broadband deployment is ubiquitous. I assume Chairman Powell will make sure that we are doing everything within our power to effectuate the purposes of the Telecommunications Act, including broadband deployment. That doesn't speak to a particular policy of how one does that. In the past, FCC reports have demonstrated that broadband is rolling out as reasonably as expected, although there are parts of the country where, and I can't remember the exact words, there is a danger of it not rolling out as quickly as possible. The Commission will continue to monitor this as closely as possible under Chairman Powell's supervision.
One thing Chairman Powell has made very clear, and we all subscribe to, is eliminating the barriers to competition. My guess is he will be keen on removing any unnecessary regulations that adversely affects investment and competition.
BW: You had some concerns about the SBC application to provide long distance service in Kansas and Oklahoma. As you know, Rep. Tauzin wants to allow RBOCs to provide Inter-LATA data services without fulfilling section 271 requirements. He argues that will be a boon to high-speed Internet and broadband deployment. What are your thoughts on this issue?
Ness: The Commission has, with great fidelity to the Act, implemented the intent of Congress to insure that the Bell Operating Companies are able to get into long-distance if and when they open their markets. Congress put a roadmap in the statute of how someone gets to that point. We have tried as hard as we can to enforce that appropriately. To the extent that the incentives for opening up the market are lessened, then one has concerns that that will not be market opening and it will be difficult, even in the best of circumstances, to compete against an incumbent. If the existing infrastructure, which I would note, was largely constructed under a guaranteed rate of return by the ratepayers, is not truly open to competition, then it will be impossible in many parts of the country to generate competition.
BW: What should we do, then, to insure that the infrastructure is really open?
Ness: We have to make sure that the incentives are properly in place for local competition. That the rules that we have put in place in the last few years are rigorously enforced. Where the market is open to competition, the Bell Operating Companies absolutely have the right to provide long distance service. We gladly approve those applications. But where they are not ready, where it is not reasonably possible for competitors to compete, then the Bells should not be granted the opportunity to get into the long distance business.
BW: But do we need perhaps more legislation, beyond the 1996 Act, to insure local competition? Are additional incentives needed in some way, shape or form?
Ness: If someone had a proposal before Congress, that would be one thing. But what you need to have, it seems to me, is efficient competition in place. That is where the pricing of network elements is consistent with the competitive environment. There are very good examples of where that is happening. My guess is the Act has demonstrated that it can work. It just takes a very, very long time before you are able, even in the best of circumstances, to get competition, not just for business customers, where there is quite a bit of competition around the country, but to get residential competition, where it is far more difficult and far more costly. It just takes time for this to roll out. I am pleased to see we are beginning to see facilities-based competition on the part of cable operators, who are now providing telephony over their systems as those systems have been upgraded. But it takes time to upgrade. It is very capital intensive. And there have been some technology problems up to now that have not made it any easier.
Similarly, we are beginning to see other possibilities through wireless competition, which is all very good. Broadband access to the Internet will soon be introduced by some of the satellite operators. I would remind you that DSL has been around for a long time. It was only when there was competition from cable that the Bell Operating Companies accelerated the rollout of DSL. Originally, it was going nowhere in large measure, I suspect, because they did not want to see other things like T-1 lines cannibalized. I fear to the extent that other companies who are competing on DSL are no longer financially in a position to do so, we may see a slowdown of DSL rollout, to the detriment of the public.
BW: In your statement on the AOL-Time Warner merger, you said with regard to the ISP access provisions that you didn't want to "import our analysis and conclusions in this proceeding into" the Notice of Intent on open access by cable companies. How should cable be treated in this matter?
Ness: The AOL-Time Warner decision is not a template for addressing the issue. There has been a voluminous record in the cable access proceeding. Let's examine that record with fresh eyes. What we should be focused on, it seems to me, is whether the deployment of new technologies occur in a manner that is beneficial to the American people. And how we get there, we will see from the record in the NOI.
BW: On the regulatory front, the Commission has to make a decision soon on whether an ILEC has to allow a CLEC to colocate multifunctional equipment in the ILEC's central office. What are your views here?
Ness: I think that is something we should resolve in the not-too-distant future. I definitely want to see us move ahead and resolve the colocation issues so people know what the ground rules are so they can compete in the marketplace. I can't tell you how it will come out.
BW: Talking about CLECs, are predictions about the demise of that industry premature?
Ness: Yes. I think there are some very good companies. The market tends to react in a manner resembling a pendulum. Sometimes it over-funds, and then it gets frightened and retreats far too far in the other direction. There are companies, I am not going to name them, that have good fundamentals. If they can sustain their operations during this period they may well be enduring competitors. That is my hope and prayer. If not, some other company will come in and buy their assets and be able to carry on from there. But again, when you are competing against essentially a monopoly provider it is extremely difficult to be able to provide that service absent very good ground rules enabling that competition to take place and swift enforcement on the part of the regulators to make sure the ground rules are respected.
-- Stephen Barlas
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