FCC

FCC Holds Up SBC’s Dereg Bid

12/12/2004 7:00 PM Eastern

Washington— Federal regulators will take another 90 days to review a request from 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.

CABLE-LIKE STATUS

SBC is essentially asking for the same kind of broadband regulatory freedom that all cable operators that provide high-speed data service, except Time Warner Cable, enjoy today.

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.

Last Wednesday, the commission invoked its extension authority, meaning a decision is now due in early May. No FCC action would mean automatic approval for SBC.

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

SBC also asked the FCC, 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. SBC said because voice, data, and video packets all converge on the same platform they 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 FCC 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,” said Cleland. “The FCC doesn’t have that authority.”

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 the cable companies, SBC plans to launch “IP-based TV services” starting in the fourth quarter of 2005, according to a company statement made 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 must 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.

AT&T’S IN THE FIGHT

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 FCC’s authority to grant.

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

Congress created two paths for phone companies to provide video programming, said Cleland, either as cable companies or as open-video system providers.

“It did not create a third option, which says no regulation,” he added.

September