Verizon Calls on FCC to Clarify Broadband Policy to Align Incentives to Invest

WASHINGTON - The Federal Communications Commission already has the "right tools" to stimulate a reversal of the dramatic decline in capital investment in America's telecommunications infrastructure and the resulting loss of hundreds of thousands of jobs. But the FCC needs to act quickly if the needed capital investment is to occur soon, said Tom Tauke, senior vice president for public policy & external affairs - Verizon.

During a recent talk at a Cato Institute Policy Forum, Tauke noted that capital investment in America's telecommunications infrastructure is projected to be about $45 billion in 2003, down from $118 billion in 2000. This translates into lost jobs. Since 2000, about 250,000 jobs have been lost directly from the telecommunications sector and the manufacturers that serve it; including the information technology sector, the total is 500,000 jobs. In addition, there has been a loss of critical research and development capabilities that have kept the United States on the leading edge of communications technology.

Tauke said that the broadband policy contained in the FCC's Triennial Review Order didn't provide the clarity and certainty needed for investment. "But now is not the time to throw up our hands in frustration," he said. "Now is the time for the FCC to roll up its sleeves and get it right. It's very clear that [the FCC] intended that new fiber deployed would not have to be unbundled. I think the FCC has the framework for a right policy on broadband, but there's confusion [in the details]. There's still more work to do."

Tauke said the FCC's order with respect to broadband is clear that incumbent telcos are not required to lease piece parts of new fiber networks to competitors when the fiber is lit and connected to a single-family house in a market served by a provider that was never part of the Bell System, such as the former GTE. But this aspect of the order is not clear on much else. For example:

Does the same no-unbundling-required rule apply in Bell company markets? What's the rule when the customers served live in an apartment building rather than detached housing? The order is murky on the definition of a business: what's the rule when the customer is a dry cleaner or a drugstore? How about an insurance firm or office at a strip mall?

The lack of certainty that the answer in all cases is "no unbundling required" chills investment by the very companies most capable of doing it, Tauke said. To incite spending, the FCC needs to clarify that competing broadband infrastructures will be on an equal footing.

Tauke cited a study recently published by the Millennium Research Council that said "lifting all remaining regulations on broadband would have an immediate impact on the economy by accelerating job and income growth." It also said as many as 1.2 million new jobs could result over the next decade from widespread deployment of broadband technologies.

Beyond the rules governing physical networks, Tauke said the FCC also needs to clarify that broadband services will be regulated the same way no matter which company offers them. "The FCC has had two proceedings tied up for a long time" that can resolve the issues, he said. He called on the commission to move quickly to complete work in this area.

"If these things happen, then I think it's fair to say that the FCC will have unleashed the ability of companies to invest in this country's vital wireline infrastructure and turn it into something that's going to be useful for America in the years ahead," he said.

"My hope is that the chairman and the other commissioners at the FCC will not be content until they accomplish their objective of getting a good national broadband policy - a policy that encourages investment in wireline networks."

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 and 221,000 employees. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 137.6 million access line equivalents and 34.6 million Verizon Wireless customers. Verizon is the third largest long-distance carrier for U.S. consumers, with 14.6 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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