FCC changes DSL classification

The Federal Communications Commission on Friday voted to reclassify DSL broadband service, thus freeing phone companies of regulations that require them to share their infrastructure with Internet service providers.

DSL will now be considered an "information service" instead of a "telecommunications service," a distinction that puts DSL in line with the classification of cable modem services. The change in semantics was expected after the U.S. Supreme Court's ruling in the Brand X case just five weeks ago. The court's decision upheld the FCC's classification of cable modem service as an information service.

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What's new:
As expected, the FCC on Friday reclassified DSL, the high-speed Internet service offered by phone companies, as an "information service." The ruling puts phone companies on the same regulatory footing as cable companies, which are exempt from having to offer access on their infrastructure to competing Internet service providers.

Bottom line:
The phone companies say that the ruling will free up more of their resources to improve their broadband services, although at least one FCC commissioner says he will be watching to see if that's really the case. ISPs such as EarthLink, which already have a hard time competing on price, may still negotiate access contracts with the phone companies but are looking for alternative ways to deliver their services.

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Now the phone companies and the cable companies are exempt from "common carrier" rules that require them to share their infrastructure with Internet service providers.

While the new regulatory framework is good news for the Bell phone companies, they are not entirely off the hook. There will be a 1-year transitional period where phone companies will still be required to provide network access to ISPs. DSL providers will also still be required to comply with the 1994 Communications Assistance for Law Enforcement Act, or CALEA, which requires broadband providers offering voice services to allow law enforcement officials access to their networks for wiretapping.

Phone companies offering DSL service will also still be required to contribute to the Universal Service Fund, a federal program that subsidizes phone service in rural areas. During Friday's meeting, commissioners emphasized their commitment to keeping USF funded. As part of this commitment, they have stipulated that phone companies will continue to pay their normal share into the fund for the next nine months. During this period the FCC will review funding alternatives. If an agreement can't be reached, the FCC has the right to extend this period or can also increase the proportion of funding from other sources.

"The Universal Service Fund is one of the pillars of the Telecom Act," said FCC Commissioner Michael J. Copps. "And I wouldn't be party to an agency that would abandon it."

Phone companies will also be required to continue to serve the needs of the disabled community.

"There are certain social policies that we as a country must ensure that won't be delivered by the market," said Commissioner Kathleen Q. Abernathy.

The FCC and the phone companies themselves believe that the new classification will put DSL providers on even footing with the cable companies, allowing them to compete more aggressively. The result, they say, will be lower prices and more choice for consumers as well as higher penetration rates of DSL into communities throughout the United States.

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"The benefits of this ruling will ripple across our communities by encouraging greater investment in and a wider rollout of broadband networks," James C. Smith, senior vice president of SBC Communications, said in a statement. "Discarding decades-old requirements and regulatory assumptions that are out of sync with today's competitive broadband marketplace will also spur more innovative products and services for consumers."

But this theory is yet untested. Commissioner Copps, who was initially opposed to the reclassification of DSL and who disagrees with the Supreme Court's ruling on Brand X, said that changing the rules

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