FCC to hammer out new DSL rules

The monthly open meeting, which was scheduled for Thursday, was postponed until Friday as commissioners work through the details of proposed new rules for DSL service.

An FCC spokeswoman would not comment on the reason for the delay, but a source said that the FCC chairman, Kevin Martin, a Republican, was trying to rally support for his proposal to reclassify DSL services, which would result in more lax regulations for traditional phone companies providing the service.

Martin has been pushing for changes to rules that regulate DSL service for several weeks. In July he circulated a proposal that would treat DSL as an information service instead of a telecommunications service, putting DSL service on the same footing as cable modem services.

The FCC ruled in 2002 that cable modem service is an information service and not a telecommunications service. The decision was upheld last month by the United States Supreme Court. If the measure to change DSL classification is approved, phone companies offering DSL service would be exempt from "common carrier" rules that require them to share their infrastructure with Internet service providers.

Martin must convince two of the other three FCC commissioners to join him in making the DSL designation. The agency is evenly split politically, with two Republicans and two Democrats. One seat is vacant.

The commissioners have been behind closed doors trying to work out an agreement that both Republicans and Democrats can support, the source said. At least one of the Democrats--either Michael J. Copps or Jonathan S. Adelstein--are likely to agree with the change in the rules if certain conditions are met, the source said.

Specifically, Democrats are looking for a transitional period where ISPs would still be guaranteed access to wholesale DSL service. They also want the FCC order to expressly state that deregulating DSL would only apply to Internet service providers (ISP) access and would not impact access to local loops from competitive local exchange carriers (CLEC).

The current rules allow ISPs, such as EarthLink, to buy finished DSL services at wholesale prices. The ISPs then sell customers Internet services, such as Web access, spam filtering and specialized content on their portals using the DSL service from the phone companies. By contrast, CLECs such as Covad, only lease the copper infrastructure from the phone companies. These carriers provide the infrastructure equipment to create the DSL service.

Another possible stumbling block in negotiations concerns the Universal Service Fund, which subsidizes phone service in rural areas and helps fund programs such as e-rate. The initial draft proposed that DSL providers would no longer have to contribute 10 percent of their revenue into the fund.