Comcast CEO offers olive branch to Bells

Speaking at the United States Telecommunications Association's annual conference, Roberts, CEO of cable giant Comcast, proposed a truce amid the regulatory mudslinging between cable and traditional phone industries. The two sides are in a fierce competitive battle for voice and broadband Internet customers.

"Today, I ask you to join me to help unleash the power of competition, to use energies not to pit the government against each other, but to (advocate) a national deregulation policy that benefits all of us," Roberts said during a morning keynote speech.

He added that the two industries should not advocate regulations as a "competitive sword in what should be marketplace battles, not political battles." Instead, the two sides should join in preventing the government from regulating their Internet-based businesses, including the blossoming voice over Internet Protocol, commonly known as VoIP.

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"Whatever our differences, we should be fighting for the same fundamental goals," he said, speaking at his first USTA conference.

This extension of an olive branch to skeptics from the phone industry is nothing new, nor is the appearance of cable and telephone executives on the same stage at telecommunications shows. Patrick Esser, executive vice president of Cox Communications, said during his keynote speech at the 2003 Supercomm Conference that he felt like "a fox in the henhouse."

In the time since Esser's comment last year, there's been little peace and much more competition between the two industries.

Ivan Seidenberg, CEO of Verizon Communications, was particularly wary of Roberts' promises. Speaking during a press conference after his and Roberts' speeches, Seidenberg noted that the existing regulatory structure continues to leave the traditional phone business at a disadvantage while cable's own forays into the voice business remain regulation-free.

But Seidenberg agreed that the government should keep its hands off Internet-related technologies. Verizon has a vested interest in a laissez-faire environment, because it plans to extend super-speedy fiber-optic lines to a million homes in nine states by the end of this year. A fiber pipe into a home would offer broadband Internet access speeds of up to 15 megabits per second for less than $50. It would also lay the groundwork for delivering video programming.

"As a general principle, IP-based (businesses) should be under a different rule book," he said.

Over the past few years, cable and the Bells--including SBC Communications, BellSouth and Qwest Communications International--have slowly crept into eachother's businesses. Cable companies plucked away landline phone customers from the Bells by being the first to offer broadband Internet and then bundling it with voice and video.

Responding to this threat, the Bells over the past year have been cutting prices for their DSL broadband services in hopes of slowing down cable's momentum. So far, their method has worked; DSL growth is outpacing cable's, though DSL still lags in total market share in U.S. households. The Bells hope the combination of broadband Internet, wireless and satellite TV deals will offset losses from their traditional phone businesses.

The Bells are fresh from a major regulatory victory that creates government-set rates for access to local telephone networks. The move is seen largely as negatively effecting MCI and AT&T, which relied on the so-called UNE-P requirements to attract local phone customers from the Bells.

Cable has its own regulatory problems. In April, a U.S. appeals court rejected the Federal Communications Commission's attempt to rehear a case that could introduce local regulations to cable broadband services. The case would classify cable broadband as a telecommunications service, earning the network a label that, under law, would allow governments to regulate it.

Some local bodies have asked for cable broadband services to allow third-party providers to operate on their networks. The Bells can relate to cable's frustration; the Telecommunications Act of 1996 required them to share DSL lines with start-up Internet providers. Many of these sharing rules, however, are being rolled back.