With the order incumbent local exchange carriers (ILECs or Baby Bells) scored a victory on one hand and lost out on another. Rules governing their giving access to broadband loops to DSL service providers were relaxed, but rules allowing competitors to lease local loops at a discount remain in place for the moment.

Rather than scrapping federal regulations allowing competitive carriers to lease local switches from ILECs at a discount, the FCC offloaded the responsibility to state regulators. Competitive carriers would get three years to install and transition to their own switches if states ruled against them.

This decision was split 3 to 2, with Powell having to issue his first dissenting statement since he took the chair of the Republican-controlled commission. Fellow Republican Kevin Martin promoted the idea of state control, with the support of the two Democrats on the commission.

Martin said that the decision was in the spirit of a Court of Appeals ruling that uniform national rules may be inappropriate, and that geography should be taken into consideration. The barriers competitors face in deploying equipment and trying to compete are different in Manhattan, Kansas than in Manhattan, New York, he said.

I believe this decision will prove too chaotic for an already fragile telecom market, Powell said in a statement. He said that giving responsibility to the states will result in 51 state evaluations, followed by 51 decisions and 51 legal challenges of these decisions, resulting in little chance of regulatory or legal harmony.

The uncertainty that has surrounded the telecommunications industry for nearly two years – limiting access to capital and stifling new investment – will continue as a result of today’s decision, Qwest Communications International Inc’s VP of public policy Steve Davis said in a statement.

In another part of the order, the FCC said that line-sharing, a regulation in which DSL providers are allowed to cheaply lease the high-frequency portion of local copper in order to provide broadband services, will be phased out over three years. Unsurprisingly, the ILECs liked that idea, and the DSL ISPs were against it

DSL firms will only be allowed to acquire new customers on the old discounted pricing for one year before tariffs become the subject of negotiations between the ILECs and the ISPs. It is said that 40% of broadband subscribers, mainly consumers, use line sharing. The remaining 60% use a second line or have higher-speed connections.

DSL provider Covad Communications’s CEO Charles Hoffman said in a statement: The ultimate effect on our consumer broadband business will depend on our ability to negotiate fair and reasonable prices substantially lower than the whole loop cost that will ultimately be permitted under FCC rules.

Dissenting commission Michael Copps said: We are playing fast and loose with the country’s broadband future. Today we may be choking off competition in broadband. Consumers and the internet itself may suffer.

Source: Computerwire