State, Federal and Local Regulatory Policies:  Potential Burdens and Benefits

Recognizing that the Board’s purpose is to promote universal broadband access by 2010, it makes good sense to consider the regulatory policies that can facilitate or frustrate achievement of this goal.  Examples of policies at the federal, state or local level that impede the build-out of broadband infrastructure include the following:

1.         FCC Policy Changes: In areas not served by cable TV and wireless technologies, the absence of competitive alternatives to landline DSL offerings by Incumbent Local Exchange Carriers (ILECs) is at least partly due to the FCC’s abandonment of line-sharing and network-element-leasing policies that formerly enabled start-up competitors to gain market share at low cost.

2.         Pole Attachments: For Cable TV delivery of high-speed services, affordable pole attachment rates are a key factor.  The inability to negotiate long-term and affordable access to electric utility or telephone utility poles is an obstacle to achieving broadband ubiquity by 2010

3.         Pending Federal Legislation: Action at the federal level for statewide franchising of video services delivered over ILEC networks could permit the Bell Companies to leapfrog Cable TV competitors in their access to new customers for broadband.  A second bill would prohibit municipalities altogether from providing DSL service technology.

4.         Differing Obligations to Serve: Unlike Cable TV and wireless providers of broadband service, landline telephone utilities must use a Uniform System of Accounts, must submit to state and federal regulatory authority over pricing, service quality and consumer protection and must provide dial tone service to all customers.

5.         Federal Preemption: While wireless and cable TV providers are essentially protected from state regulatory oversight by federal preemption, ILEC operations are not preempted from state regulation with respect to landline infrastructure that can deliver DSL as well as dial tone.

6.         Market Consolidation: In view of pending mergers involving former Bell Companies (SBC/AT&T, Verizon/MCI) and cable providers (Time- Warner/Adelphia, Comcast/Adelphia), increased market concentration for a small number of incumbents leaves little room for competitive entry by new providers.

  7.         No Competitive Access for Cable: A recent Supreme Court decision (BrandX v. FCC) has upheld the denial of competitive access to Cable TV modems by competing broadband providers.

 

Additionally there is a smaller list of regulatory policies that may promote fulfillment of the goal of broadband ubiquity in 2010.  These factors include the following:

1. New Telecom Act: A rewrite of the 1996 Telecommunications Act now underway on Capitol Hill could lead to a broadened definition of Universal Service that includes funding for broadband access or a $500 million fund for broadband build-out (Senators Smith & Dorgan) It could also adopt a tax credit for broadband build-out in rural America compatible to the credit for renewable electric generators.

2.         Current Universal Service Funds: Under the Rural Exception, ILEC’s in rural and underserved areas qualify for receipt of substantial funds from the federal Universal Fund (USF) that permit them to operate profitably and modernize their networks to make them DSL-compatible.

3.         Maine’s Progressive Telecommunications Policy: Currently Maine law declares that “a modern-state-of-the art telecommunications network is essential for the economic health and vitality of the state and for improvement in the quality of life for all citizens,” and further that “all Maine’s businesses and citizens should have affordable access to integrated telecommunications infrastructure capable of providing voice, data, and image-based services.”

4.         Pine Tree Zone Tax Policy: Recent Maine legislation enables businesses that would not otherwise relocate in Maine or make significant new investments to qualify for exemption from state income taxation, in conjunction with local property tax waivers.

5.         Incentives for Development of New Technology: The Maine Technology Institute makes available federal and state start-up funding for innovative technologies that have yet to find financing in the marketplace.

6.                  Broadband over Power line: Delivery of broadband over electric lines (BPL) by electric utilities represents the addition of a major market entrant to Maine’s fragmented setup for DSL/Cable TV/ wireless internet access, to date, there are no regulatory policies in place concerning BPL but there is strong statutory support in the form of Maine’s existing telecommunications policy.  (Item 3 above.)