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FCC Delays SBC’s Dereg Request

12/09/2004 4:31 AM Eastern

Federal regulators will take another 90 days to review a request by SBC Communications Inc. that could set the stage for large phone companies to offer video programming without complying with traditional cable regulations.

SBC has asked the Federal Communications Commission to declare that its Internet-protocol services should not be regulated like traditional telephone services, including requirements to grant access to competing Internet-service providers at nondiscriminatory rates.

The company is essentially asking for the same kind of broadband regulatory freedom that all cable operators, except Time Warner Cable, currently enjoy in providing high-speed-data service.

SBC filed the petition in February under a law that gives the FCC one year to act, with the option to extend review for additional 90 days. The commission invoked its extension authority Wednesday, meaning that a decision is now due in early May. No action by the agency would mean automatic approval for SBC.

The FCC said the extension was necessary because SBC had raised “significant questions” about whether its request justifies FCC forbearance.

SBC also asked the commission, in a companion petition filed the same day in February, to declare that traditional rules governing broadcasters and cable companies do not apply to its IP-video programming because voice, data and video packets all converge on the same platform and shouldn't be split apart to conform with legacy regulatory requirements.

“The technology underlying IP-based networks and the ability of such networks to converge services defy such segregation,” SBC told the FCC. “As a result, the service and network categories on which traditional regulation was based cannot practically be applied in an IP world.”

Although the forbearance petition and the request for declaratory ruling were distinct requests, SBC told the agency that it should see a close relationship between them. However, the FCC does not face a legal deadline to act on SBC’s declaratory ruling.

Precursor media and telecommunications analyst Scott Cleland said he didn’t believe the FCC would issue the sweeping ruling sought by SBC.

“The Bells have long wanted the FCC to completely deregulate them with a stroke of the pen. The FCC doesn’t have that authority,” Cleland said.

SBC has announced plans to spend up to $4 billion on a fiber network that will reach 18 million homes by the end of 2007. Taking on cable companies, SBC plans to launch “IP-based TV services” starting in the fourth quarter of 2005, according to a company statement in November.

An SBC spokesman was quoted elsewhere as saying that the advanced IP network will be capable of delivering four simultaneous video streams, including HDTV and video-on-demand services.

The San Antonio-based Baby Bell recently hired Dan York, a former senior vice president of programming and development at In Demand, to spearhead its video strategy.

Cable operators need local approvals and pay local fees to provide television service, but SBC wants the FCC to immunize its IP-based video services from those requirements -- a clash that might require congressional intervention.

The National Cable & Telecommunications Association and cable operators have not participated in the debate over SBC's forbearance request. But AT&T Corp., EarthLink Inc. and consumer groups are fighting SBC, saying that broad deregulation is either unwarranted or beyond the agency’s authority to grant.

NCTA spokesman Brian Dietz said, “Any comments we have we will first make to the FCC.”

Congress, Cleland said, created two paths for phone companies to provide video programming -- either as cable companies or as open-video-system providers.“It did not create a third option which says no regulation,” he added.

September