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Baby Bells win another FCC victory

Carriers get even more incentive from the feds to build fiber-optic networks into residences. And guess who's left out in the cold?

The Baby Bells racked up another victory Wednesday, when the Federal Communications Commission ruled that they can build fiber-optic networks into apartment buildings without sharing their infrastructure with rivals.

The FCC voted on the matter during an open meeting in Washington, D.C., on Wednesday. The new rules apply to multitenant buildings that house both residents and some small businesses, such as dry cleaners and mini markets. But the rule would not apply to office buildings that have only a few residential apartments.

Our reporters' take on what's
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As part of the 1996 Telecommunications Act, the Baby Bells are required to lease or "unbundle" access to their copper network wires, which enable telephone and dial-up Internet services.

But last year, the FCC ruled that new broadband networks built with fiber optics to serve single-family homes would not be subject to the same sharing requirements imposed on the older copper wire infrastructure. In March, the U.S. Court of Appeals for the District of Columbia upheld the FCC's ruling. This week's ruling extends the reach of the original by addressing multitenant buildings.

Michael Powell, chairman of the FCC, praised the recent decision for drawing a workable distinction between multiunit buildings that are primarily residential and other, more commercial locations. He said that by clarifying the rules, big phone companies now have more incentive to deploy these fiber networks, particularly in urban areas.

"Today we take another step toward ensuring that all Americans, not just those residing in single-family homes, will reap the benefits of the information age," he said in a statement. "This item in sum stands for the idea that a person living in an apartment or housing project should receive the benefits of information at the speed of light, and those benefits should not be eliminated just because they either (don't) choose, or cannot afford, a large single-family home."

Verizon Communications and SBC Communications, two of the four Baby Bells, have already announced plans to spend several billion dollars to build fiber networks to homes across the country, which will make them the first of the Bells to do so.

Fiber networks provide almost limitless bandwidth capacity, which can be used to provide bundles of services, including high-speed data, television and video programming, in addition to Internet telephony. Phone companies are adding fiber as a way to fend off competition from cable providers, which also offer bundled service over high-speed networks.

FCC Commissioner Michael J. Copps disagreed with Wednesday's ruling.

"No matter how this decision is dressed up in the sheep's clothing of broadband relief, the wolf beneath means less choice and less price competition for anyone who lives and works in a multitenant building," he said in a statement. "This outcome is inconsistent with the procompetitive, market-opening legislation that Congress put in place in the 1996 Telecommunications Act."

Carriers who compete with the Bells, such as AT&T and Covad Communications, were also unhappy with the decision. They argued that the new rules make it nearly impossible for them to compete for millions of small-business customers that operate within residential buildings.

"The commission has granted new, wide-sweeping relief to the Bells that denies facilities-based competitors access to last-mile bottleneck transmission facilities," Jason Oxman, general counsel for the Association for Local Telecommunications Services, said in a statement. "The Bells have expanded their monopoly reclamation project to millions more consumers, without having committed to deploy a single upgraded facility to any of them. The FCC has it backwards: Competition, not monopoly, is the only incentive for broadband deployment."