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PUC may settle telecom squabble

Complex FCC ruling tosses decisions about access back to states

The Oregon Public Utility Commission probably will get the final say on whether companies such as Qwest can charge smaller competitors high rates to use their networks.

That's the likelihood based on an all-over-the-map Federal Communications Commission decision on competition among telecom providers that has large companies protesting and some small companies shrugging.

In their decision, the federal commissioners had sought to clarify whether the so-called 'Baby Bells' such as Verizon Communications Inc. and Qwest Communications International Inc. Ñ which provides the bulk of local phone service in Oregon Ñ must keep offering discounted access on their lines to smaller competitors.

Qwest and the other Baby Bells, regional operating companies that resulted from the breakup of AT&T in the 1980s, must still offer the discounts, pending reviews by state utility commissions on the matter, the FCC said.

On the other hand, the decision does not require the Baby Bells to offer competitors access to new fiber-optic networks that it might install in rural areas. The states must decide whether the Bells must share digital lines running into customers' homes and small businesses.

Still, local providers praised the ruling for bringing much of the decision onus to the state level.

'Having a local regulatory service is really important,' said Rich Bader, chief executive officer and president of EasyStreet Online Services, a Beaverton-based Internet service provider.

'If a consumer or a business or Internet service provider like EasyStreet needs to invoke the resources of a Washington, D.C., agency to resolve a problem, there's a big barrier,' Bader said. 'In Salem, you know the people there, there are relationships built up, and I think they would do a very good job in this situation.'

Qwest blasted the ruling, saying it harms the telecom's ability to compete.

'The uncertainty that has surrounded the telecommunications industry for nearly the past two years Ñ limiting access to capital and stifling new investment Ñ will continue as a result of today's decision,' Steve Davis, Qwest's senior vice president of public policy, said in a statement.

FCC Chairman Michael Powell wrote the dissenting opinion on the ruling, which passed by a 3-2 vote.

Bader predicted that the FCC ruling, which stemmed from a court-ordered review a year ago, will eventually face legal challenges.

'Whereas this might be the final word on it from the FCC, all the reports suggest this will go back to the courts,' he said. 'And, a lot of focus will shift back' to the Oregon Public Utility Commission.

Among many stipulations, the FCC decision stated that the Bells now can refuse discounts to smaller providers that use switching facilities when offering services to large-volume businesses.

What's more, companies such as Qwest will not be required to share 'next-generation' broadband lines, to be developed down the road, with competitors.

While telecom wonks nationwide say it'll take months before any effects from the ruling occur, two of Oregon's most prominent industry players said it's likely to have little effect on them.

Dudley Slater, chief executive officer for Beaverton-based Integra Telecom, said his company benefits from the ruling because the company has created much of its own network and systems.

'The way it pertains to us is, it really validates our model,' Slater said. 'If you look at the market today, the majority of competitors put their brand on the underlying networks provided by monopoly providers. What we do is build on our own network. The FCC wants all companies to follow the model that Integra has built.'

Likewise, Bader said, EasyStreet considers the ruling a nonevent. EasyStreet delivers its digital subscriber line high-speed Internet services over Qwest and Verizon lines. The Bells have a different relationship with competitive local exchange companies, which will bear the heaviest brunt of the ruling.

EasyStreet works with the Bells under a different program, Bader said.

'Our business model is confirmed, and there's no anticipated change in services or pricing or any impact to our customers because of this,' he said. 'The only place where it could have a potentially positive impact is from our competitors who haven't used the same strategy.'

In some ways, the decision pits giant telecom providers against one another. AT&T officials said the order gave the Bells vast degrees of deregulation.