DSL Deregulation

While DSL companies struggle out of bankruptcy and debates rage on how to open up the broadband market to fair competition, the FCC has concluded that Internet access is an "information service," potentially changing the broadband landscape in dramatic ways.

What does this mean? Well, "information services" are subject to fewer regulations than "wire-line" services. The gist of many of these regulations is that, in order to offer services such as long distance, the incumbent local exchange carriers (ILEC, a.k.a. the "Baby Bells") have to open up their networks to competition.

It is these regulations that allow companies like CTC Communications to compete with the ILECs (hence their name, competitive local exchange carriers or CLEC). These regulations also allow companies like DirectTV to offer DSL services using the Verizon network at competitive prices.

By packaging additional services and features (and hopefully offering better service), companies like DirectTV can compete with ILECs like Verizon using Verizon's own network. It may not sound completely fair to Verizon, but Verizon takes a piece either way and the consumer (theoretically) ends up with more broadband options.

The core logic behind the FCC's decision to deregulate DSL services is that a regulated service has a slower time-to-market than a less regulated or unregulated service. This means that the ILECs should be able to deliver new DSL services more quickly and at a lower cost than the current market will allow. The FCC hopes that this will allow DSL to better compete with other broadband technologies such as cable.

However, critics argue that deregulating DSL would completely eliminate what competition is left in the DSL market: "It could effectively loosen federal rules that require Bell companies and other incumbent carriers to offer their competitors equal access to the telecommunications networks they control." This means that the CLECs could restrict what DSL services ILECs can offer, charge the ILECs more for services than they charge themselves, or completely drive competition out of the DSL marketplace.

Consequently, it is no wonder that the U.S. Telecom Association, the principle lobbyist for incumbent local exchange carriers, is behind the proposal 100%.

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