FCC Orders Line Sharing for High Speed Internet Access

(November 19, 1999) The FCC ordered incumbent local exchange carriers to share lines with competitive local exchange carriers for the purpose of providing high speed Internet access. The order was issued on November 18, but will not be implemented for months.

See, Advanced Services Third Report and Order, CC Docket No. 98-147, November 18, 1999.

The Federal Communications Commission (FCC) adopted rules at its meeting on Thursday, November 18, directing local telephone companies to share their telephone lines with providers of high speed Internet access and other data services. Currently, phone companies split lines to provide both voice and DSL service. However, they have not been willing to share lines with competitive DSL providers. The FCC order changes this.

"This Order is intended to ensure that as many companies as possible will be able to deploy new technologies on a faster, more cost-effective basis and should accelerate the ability of residential and small business customers to access competitive broadband services from their choice of providers," an FCC press release stated.

Incumbent Local Exchange Carriers (ILECs), which own the wire which comprises the local loop, are upset with the order. For example, Bruce Posey, U S WEST's SVP for Federal Relations and Regulatory Law, stated in a press release that "this seems to be a short term 'solution' to a problem that doesn't exist. These companies are in no way 'impaired' by current arrangements and are already doing very well in the marketplace. There is no need for corporate welfare that gives one sector of a very competitive industry an unnecessary advantage."

In contrast, Competitive Local Exchange Carriers (CLECs) and Internet Service Providers (ISPs) are pleased with the order. For example, Dhruv Khanna, EVP and General Counsel of Covad Communications, stated that "as a result of today's decision, Covad will be better positioned to provide a greater number of consumers with 'always on' broadband services in a timely manner and at a more attractive price."

"Today's decision marks the true dawn of the Telecommunications Act of 1996," Khanna added. "It provides consumers with more choice, enables broadband providers like Covad to offer additional services more easily, and helps phone companies demonstrate that they have opened their markets to competition so that they can provide long distance services in their territories. This decision is solid evidence of the FCC's determination to bring advanced services to all consumers through competition."

USTA   The U.S. Telecom Association, a group which represents the interests of ILECs, reacted angrily to the FCC's order. Roy Neel, President and CEO of the USTA, hinted at litigation in the following statement:

"Today's order by the FCC to mandate line sharing is in direct conflict with Congress' intent when it created the Telecommunications Act of 1996, which sought to encourage facilities-based competition in the telecommunications market. Today's action by the FCC to mandate sharing portions of the local loop is clearly a giant step in the wrong direction."

"Not only will line sharing create a tremendous disincentive for investment by the local exchange carriers in the deployment of digital subscriber lines and other advanced services, but it will also disincent would-be facilities-based CLECs who believe in the benefits of broadband investment to serve consumers. Today's order is the ultimate form of market manipulation by the regulator to the advantage of some industry service providers, CLECs and cable companies, over another, ILECs. The FCC once again appears to be applying its public policy in a wholly inconsistent manner. Compare the passive approach the Commission takes toward the cable industry in its deployment of broadband services to the FCC's heavy-handed and invasive action by demanding the sharing of the local loop. By this decision the Commission draws close to the line of the nationalization of ILEC networks. The FCC should stop discriminating against incumbent local exchange carriers by regulating their deployment of DSL and other advanced services while supporting their unregulated competitors' ability to avoid investing in their own broadband networks or refusing to prohibit their discrimination among customers.

Despite the Commissions' acknowledging that CLECs are ahead of the ILECs in broadband deployment, the FCC once again deems itself 'referee' to choose winners and losers in the telecommunications marketplace. While the FCC claims to be pro-competition, today's order strikes a strong anti-competitive chord and is a direct assault on the UNE standard set forth in the Supreme Court's UNE decision last January.

The Information Technology Association of America (ITAA) also praised the decision. ITAA President Harris Miller said in a press release that "competitive carriers should have the right to provide digital subscriber line (DSL) in precisely the same manner as the incumbent. That means that competitive carriers should also be able to provide their DSL service over an existing incumbent voice telephone line instead of running an unnecessary and costly second line."

At issue is the provision of broadband Internet access by Digital Subscriber Line (DSL) service via copper phone wires. This technology, which is currently being rolled out by the ILECs, enables home and business customers in many areas to obtain both voice and high speed Internet connections simultaneously over a single line.

Typical home Internet service today is provided at speeds of either 28.8 or 56 kilobits per second. DSL service packages vary widely, but provide downstream service at speeds ranging from several hundred kilobits per second to several megabits per second. The faster speeds will greatly accelerate the downloading of web pages, and make possible more uses of the Internet, including audio and video entertainment, telecommuting, and distance learning.

The ILECs have recently accelerated their rollout of DSL service in response to AT&T's strategy of acquiring cable companies, and offering high speed Internet access over coaxial cable.

The order will allow a competitive high speed access company to provide a customer DSL service over the same telephone line that the ILEC provides voice service. Currently these companies must lease second phone lines to provide this DSL service.

Khanna elaborated that "Covad is paying phone companies an average of $22 per month to lease a second line, whereas line sharing should lower the price by at least 50 percent based on today's ruling. As a result, end-user costs for Covad's broadband services should be more affordable and competitive with the phone companies' pricing."

Bell South, an ILEC, expressed concern about pricing for line sharing. "We are hopeful the FCC's pricing guidelines do not require local telephone companies to give competitors access to local loops at prices that contribute little or nothing to the overall cost of those facilities. At the end of the day, what the competitors don't pay for, the basic local telephone customer will," said Robert Blau.

"It is understandable that the FCC wants to make high-speed Internet access widely available at low rates. It is important, however, that users of those services pick up a fair share of the cost of the local loop," said Blau.

In addtion to Covad, other companies which provide DSL service, and which are likely to benefit from the FCC's order include Northpoint Communications and Rhythms NetConnections.

FCC Press Release.
Re: Line Sharing Order.
Date: November 18, 1999.
Source: FCC.


ACCELERATE availability of ADVANCED telecommunications SERVICES
for residential and small business consumers

"Line Sharing" to Lower Cost and Increase Availability of Broadband Services Used for High Speed Access to the Internet

Washington, D.C. Today, the Federal Communications Commission (FCC) adopted rules to promote competition for advanced services, by directing local telephone companies to share their telephone lines with providers of high speed Internet access and other data services. This Order is intended to ensure that as many companies as possible will be able to deploy new technologies on a faster, more cost-effective basis and should accelerate the ability of residential and small business customers to access competitive broadband services from their choice of providers.

The Advanced Services Third Report and Order adopted today permits competitive carriers to obtain access to the high-frequency portion of the local loop from the incumbent LECs over which the incumbent LEC provides voice services. This will enable competitive carriers to provide Digital Subscriber Line (DSL)-based services over the same telephone lines simultaneously used by incumbent LECs to provide basic telephone service, a technique referred to as "line sharing."

Line sharing will permit consumers to obtain innovative data services from either incumbent or competitive carriers, without having to forego the traditional voice services from their provider of choice. Since line sharing allows customers to receive both services on the same line, it eliminates the need for consumers to procure a second line. This allows for more efficient use of the existing telephone network.

Incumbent LECs are already using line sharing technology to offer basic telephone service and DSL services over the same line. Thus the Commission's action places competitive carriers on a more equal footing with incumbent LECs, while at the same time not affecting the incumbent LEC's ability to offer its DSL service or its voice service.

The Commission also established policies intended to ensure the compatibility of advanced services and traditional phone service and to minimize the risk of harmful interference among services. The policies adopted in this order ensure that American consumers will not face undue delay in receiving the benefits of technological innovation.

The Order adopted gives states and this Commission an opportunity to work together to ensure that competitive carriers can begin providing innovative data services as quickly as possible, thereby fulfilling the mutually shared goal of expediting the deployment of advanced services to all Americans.

Action by the Commission November 18, 1999, by Third Report and Order (FCC 99- 355). Chairman Kennard, Commissioners Ness, Powell and Tristani with Commissioner Furchtgott-Roth concurring in part and dissenting in part and issuing a statement.

Report No. CC 99-54
CC Docket No. 98-147


Common Carrier Bureau contacts: Staci Pies, Margaret Egler, and Carol Mattey at (202) 418-1580 TTY: (202) 418-2555