WATPA: FW: F.C.C. Begins Rewriting Rules on Delivery of the Internet (NY Times)

From: Norm Jacknis <norm@jacknis.com>
Date: Sun Feb 15 2004 - 16:48:04 EST

Interesting developments on the Internet are described in this article. Is
anyone using the Internet for telephone calls? If so, what's your




February 13, 2004
F.C.C. Begins Rewriting Rules on Delivery of the Internet
WASHINGTON, Feb. 12 - Homes could start being connected to the Internet
through electrical outlets, and consumers and business may find it easier to
make cheaper telephone calls online under new rules that the Federal
Communications Commission began preparing on Thursday.
Taken together, the new rules could profoundly affect the architecture of
the Internet and the services it provides. They also have enormous
implications for consumers, the telephone and energy industries, and
equipment manufacturers.
Michael K. Powell, the F.C.C. chairman, and his two Republican colleagues on
the five-member commission said the twin moves, and a separate 4-to-1 vote
Thursday to allow a small company providing computer-to-computer phone
connections to operate under different rules from ordinary phone companies,
would ultimately transform the telecommunications industry and the Internet.
"This is a reflection of the commission's commitment to bring tomorrow's
technology to consumers today," Mr. Powell said. He added that the rules
governing the new phone services sought to make them as widely available as
e-mail, and possibly much less expensive than traditional phones, given
their lower regulatory costs.
At the same time, once the rules allowing delivery of the Internet through
power lines are completed, companies could provide consumers with the
ability to plug their modems directly into wall sockets just as they do with
a toaster, desk lamp or refrigerator.
Under the new rules, expected to be completed in coming months, electric
utilities could offer an alternative to the cable and phone companies and
provide an enormous possible benefit to rural communities which are served
by the power grid but not by broadband providers. A number of utility
companies have been running trials offering high-speed Internet service
through their transmission lines.
While the technology has been developed, it is not clear if such a service
would be profitable or able to compete in markets dominated by cable and
telephone companies. But F.C.C. officials noted that the vast majority of
the nation's households did not yet have high-speed Internet service,
leaving the market wide open to rivals.
In the phone proceedings on Thursday, a majority of the commissioners
suggested that new Internet phone services should have significantly fewer
regulatory burdens than traditional telephone carriers.
The commissioners also voted 4 to 1 to approve the application of a small
Internet company, Pulver.com, ruling that its service of providing
computer-to-computer phone service, called Free World Dialup, should not
make it subject to the same regulations and access charges as the phone
Industry experts say that neither the phone service nor the broadband
delivery systems offered by electric utilities would make sizable inroads
for at least the next two years. But in moving forward with the new
regulations, they said the F.C.C. was reducing regulatory uncertainty and
encouraging major companies and investors to put lots of money into the new
technologies to enable them to move to market more quickly.
A number of companies, including giants like Time Warner and AT&T, have
recently announced plans to get into the business of delivering "voice over
Internet" telephone services through cable television and phone connections.
Kathleen Q. Abernathy, a Republican commissioner, said the nation "stands at
the threshold of a profound transformation of the telecommunications
marketplace" as more companies move from traditional circuit-switching phone
technology to Internet-based delivery systems.
But a Democratic appointee, Michael J. Copps, raised objections to the
Pulver petition and questioned the underlying themes of deregulation in the
two rule-making proceedings. He said they had set the agency on a course
that could effectively rewrite the Telecommunications Act of 1996 and make
it easier for the leading phone companies to escape needed regulation.
Mr. Copps also criticized the majority of the commission for rejecting a
request by law enforcement agencies that the F.C.C. first work out the legal
and technical problems in monitoring phone calls over the Internet before
moving ahead.
"I believe it is reckless to proceed and I cannot support this decision at
this time," he said of the Pulver application. "The majority apparently
prefers to act now and fix law enforcement issues later - along with
universal service, public safety, disability access and a host of other
policies we are only beginning to address.''
Mr. Powell replied pointedly to Mr. Copps's criticism, arguing that it was
time for the commission to offer a new deregulatory climate that the old
phone companies may seek to take advantage of along with their competitors.
"The Telecommunications Act is nine years old,'' he said, "and it is being
rewritten by technology."
The decision to begin writing rules for Internet-based phone services was
hailed by major manufacturers of Internet and telephone equipment and by
some of the largest phone carriers, which are preparing to offer
Internet-based phone services of their own.
" Verizon strongly agrees that the F.C.C. should move forward quickly to
apply a light touch in regulating true voice-over-the-Internet services and
should not burden this new technology with the same economic regulations
that apply to the traditional phone network," the company, which is based in
New York, said in a statement on Thursday afternoon.
Another big regional Bell company, SBC Communications of San Antonio, said
it was "excited about the opportunities this will give us to deliver new
services to customers in this dynamic, swift-moving industry."
Still, thorny regulatory issues remain. Foremost among them is the web of
fees that the new service providers will have to pay to traditional phone
carriers for making the connection between their customers and the Internet
telephone customers. Interconnection and access charges in the telephone
industry have long been the source of fierce adversarial lobbying by the
local and long-distance carriers; the new technology raises complex and
arcane issues that will ultimately have a vast role in the profitability of
the new services.
In recent months, lawyers representing both the large and small phone
companies have been holding unpublicized meetings and negotiations in an
effort to come up with a new fee system. The effort, if successful, could
relieve the commission of the burden of developing a new way of paying to
support the essential features of the telephone system.
The F.C.C. has heard complaints from officials at law enforcement agencies
who say they have encountered technical and legal difficulties monitoring
terrorist and criminal suspects who make use of the new services.
Commission officials said they planned to begin considering rules soon that
would preserve the ability of the law enforcement agencies both to carry out
surveillance orders and to have the companies pay the often expensive costs
of making their systems available to monitoring.
Copyright 2004 </ref/membercenter/help/copyright.html> The New York Times
Company <http://www.nytco.com/>
Received on Sun Feb 15 16:53:07 2004

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