Verizon Says U.S. Urgently Needs National Broadband Policy That Encourages Investment

WASHINGTON - The Federal Communications Commission can readily provide the country with a national broadband policy by clarifying the rules that govern broadband networks and services, Verizon's senior vice president for public policy and external affairs, Tom Tauke, said today.

"What we need now is decisive action by the commission," Tauke said. He noted that the FCC has been conducting hearings for nearly three years, the factual record is established, and the issues are clear.

During a talk today at the Telecom Conference 2003 -- Policy Trends and the Telecom Recovery, sponsored by Charles Schwab Capital Markets - Washington Research Group, Tauke explained why the FCC should act immediately. Technological innovation in telecom has reached a tipping point, he said, and the relationship between suppliers and customers has flipped.

Today, the rapid advance in new ways to communicate - wireless, e-mail, instant messaging, voice over the Internet and more - means "customer demand now is dictating the market," said Tauke. "And customers are pushing communications providers of every ilk to give them more services, more capacity, more bandwidth."

Since last February, for instance, Verizon has dramatically increased the reach of its first generation of broadband - DSL. By year's end it will be available on 80 percent of the company's lines. Verizon has dramatically reduced the price of DSL, which triggered a competitive response from cable broadband-providers. The company has moved aggressively ahead with preparations to begin rolling out the next generation of broadband and has announced that next year it will begin deployment of fiber to the premises. But it is still not clear what rules will apply to these investments.

Tauke noted that the FCC appeared to recognize the changing nature of the communications industry when it announced its Triennial Review Order last February. The order addresses the commission's network "unbundling" policy under Section 251 of the 1996 Telecommunications Act. Last February the commission indicated that incumbent telcos would not be required to lease piece parts of new fiber networks to competitors. But appearances did not match the reality of the FCC's order when the full text was issued in August. Ten months after its vote the FCC still has not established a clear policy governing telco fiber networks.

Tauke said the FCC has:
• Failed to clarify its intent with respect to the unbundling obligations for fiber networks pursuant to Section 271 of 1996 Act, which applies uniquely to former Bell companies

• Failed to clarify the policy with respect to unbundling of fiber to multiple dwelling units

• Failed to clearly define the distinction between the mass market and the enterprise market

Furthermore, once the FCC resolves issues related to the unbundling of networks, there is still another issue it must resolve, said Tauke. And that is, what is the regulation - not of the network - but of the broadband or high-speed, advanced services that are going to be made available over these networks?

"A new paradigm requires new regulatory treatment of these services," said Tauke. "The new paradigm can and should be achieved under Title I of the FCC regulations. Broadband services are not telephony and should not be regulated under Title II legacy regulations for common carrier services. And I don't believe defining broadband services as Title II services with a promise of forbearance will get us to the new world in time. The FCC's track record on using its forbearance authority is shaky at best.

"While industry is moving at Internet speed, the FCC is working in 1200 baud modem mode," said Tauke. "It's time for the FCC to stand up to the plate and act. Two years ago, my mantra was 'old wires, old rules; new wires, new rules.' Some progress has been made, but clearly not enough. The policy for wireline broadband is still stuck in the past.

"We need the FCC to be bold. We need the FCC to be clear. We need the FCC to act with the determination and a sense of urgency at this moment in time when change is so very crucial," he said. "So today, I want to renew my plea - we need not only new wires and new rules in the U.S.-we need new thinking and a new commitment to getting something done now!"

Verizon Communications

A Fortune 10 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services, with approximately $67 billion in revenues. Verizon companies are the largest providers of wireline and wireless communications in the United States, with more than 139 million access line equivalents and 36 million Verizon Wireless customers. Verizon is the third largest long-distance carrier for U.S. consumers, with nearly 16 million long-distance lines. The company is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.

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