In a ruling earlier this month, the agency reclassified DSL (digital subscriber line) service as an "information service." This is about a lot more than semantics, because it gives phone companies a legal right to deny requests from rival Internet service providers to rent their lines.
If you're keeping score, put this one in the victory column for the Verizons and the SBCs of the world.
Independent DSL carriers had been entitled to negotiate a rate with the big carriers based on the number of lines being used. But it was an arrangement that did not sit well with the telecommunications giants, which chafed under a regulation they contended was unfair, if not simply counterintuitive. After spending billions of dollars to build a nationwide network infrastructure, why share the fruits of their investment with competing Internet service providers?
On the surface, that's the kind of stuff sure to make libertarian hearts everywhere go pitter-patter. A very similar argument convinced the Supreme Court in its Brand X decision. This past June, the court ruled that cable companies don't need to open their networks to competing Internet service providers, such as Brand X and EarthLink. In writing for the majority, Justice Clarence Thomas offered a tortured reading of the law (PDF here) to reverse the existing arrangement governing the relationship between cable companies and ISPs.
So much for the idea of a common carrier--a concept that had been on the books since the Communications Act of 1934 that led to the creation of the FCC. But that's what you get from darned activist judges. (Oops, Thomas can't be an activist. Can he? Never mind.)
The law's the law, but that doesn't mean it's necessarily good for consumers. This current FCC has consistently argued that the old rules worked against innovation and caused higher prices. We're being told the changes will act as a business incentive that leads to lower prices. My favorite comment was a particularly sunny prediction from one James C. Smith, who is a senior vice president at SBC Communications.
"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," Smith said in a statement.
I do hope he proves me wrong, but it's hard to understand how any of this will foster competition. Independent Internet service providers, which rely on other companies' infrastructures to provide services to customers, are already struggling. And after the expiration of a one-year transitional period, during which the phone companies still must offer network access to ISPs, all bets are off. My hunch is that the big guys will simply tell their former lease customers to take a hike--or pay through the nose to re-sign.
Like so many purchasing decisions, choosing an ISP often boils down to a single issue: price. For example, Verizon's 1.5mbps service is already 10 bucks cheaper than a corresponding plan from EarthLink. If those two offers were dropped on your desk, which one would you choose? I know what I'd select--and I'm afraid most of you would do just the same.