U.S. telecommunications regulators voted to let phone companies raise the rates they charge competitors to use their networks for Internet...
U.S. telecommunications regulators voted to let phone companies raise the rates they charge competitors to use their networks for Internet access.
The Federal Communications Commission’s 4-0 vote puts phone companies on an equal footing with the cable industry, which won a Supreme Court ruling in June that allowed them to avoid similar network-sharing rules. Cable companies added almost 5 million Internet customers last year, compared with 4.3 million for phone companies, and lead the industry with a 56 percent market share.
“The regulatory net has been removed,” said Paul Glenchur, a communications-policy analyst at Stanford Washington Research Group, who previously worked as an FCC attorney. “The negotiation dynamics have changed.”
EarthLink and other independent providers will “have to negotiate rates and pay a higher price,” he said.
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The previous U.S. rules, stemming from the Telecommunications Act of 1996, forced carriers to share their digital subscriber line, or DSL, networks with competitors at set rates. Cable companies don’t face the same restrictions after the Supreme Court ruling.
“The order is a momentous one,” FCC Chairman Kevin Martin said at the meeting in Washington, D.C. “It ends the inequities between the phone and cable providers.”
The order declares the phone companies’ Internet businesses to be an “information service” rather than a “telecom service,” removing them from traditional regulation as the Supreme Court did for cable operators.
The FCC order requires the regional Bells to give their rivals one-year notice before excluding them from access to phone networks. The phone companies also can negotiate higher rates starting in the next month or two.
EarthLink said it would negotiate with the phone and cable companies for the best rates for its customers.
Consumer groups criticized yesterday’s decision, saying it would reduce consumer choices by driving independent Internet service providers out of the market and would result in higher prices.
“You’ve created two corporate gatekeepers governing Internet access with no incentive to compete on prices,” said Gene Kimmelman, Consumers Union’s public-policy director.