FCC Rules GTE ADSL Service Subject to Its Jurisdiction
(November 2, 1998) The FCC announced late on Friday, October 30, that GTE's ADSL service is interstate rather than local, and hence subject to FCC jurisdiction. However, the FCC did not rule on the broader issue of whether traditional dialup calls to ISPs are local, and whether to maintain the current reciprocal compensation agreements between incumbent local exchange carriers (ILECs) and their competitors. The FCC announced in a separate statement that it plans to rule on that issue this week.
What the Letters Mean |
| ADSL. Acronym for "Asymmetric Digital Subscriber Line." A set of developing technologies and equipment that can use existing unshielded twisted pair copper wires from the phone company's central office to the end user's home or business to transfer data at rates much faster than with the prevalent 28.8 and 56 Kbps computer modems. It utilizes ADSL modems at both the central office and at the subscriber's premises to send digital signals at high speeds, typically measured in Mbps. It is asymmetric in the sense that more data is sent in the downstream direction than upstream. It enables the local loop to be used for fast Internet access, including such services as video on demand, video conferencing, work at home access to corporate LANs, operation of small business web servers, multiparty games, remote medical diagnosis, and webcasting. |
| G.Lite ADSL. One GTE ADSL standard, which is currently being tested in Portland, Oregon, which specifies transmission speeds up to 1.5 megabits per second (Mbps) downstream and 512 kilobits per second (kbps) upstream. GTE, Intel, Fujitsu Network Communications and Orckit Communications are jointly conducting the trial. The International Telcommunications Union recently adopted this standard. |
| xDSL. An acronym for all of the many Digital Subscriber Line technologies. The "x" in xDSL is a place holder for the various types of DSL service. These include ADSL (asymmetric digital subscriber line), HDSL (high-speed digital subscriber line, and high bit rate digital subscriber line), UDSL (universal digital subscriber line), VDSL (very high-speed digital subscriber line), RADSL (rate-adaptive digital subscriber line), and SDSL (single pair symmetrical services) |
| GTE. General Telephone and Electronics. GTE is a large telecommunications company which owns many independent local telephone companies. It has about 20 million customers in the U.S. and about 7 million abroad. It provides local phone service in parts of 28 states, wireless service in 17 states, and long distance service in all 50 states. GTE also provides Internet services, including Internet access and web hosting. GTE also provides government defense communications systems and equipment, directories and telecommunications-based information services, and aircraft-passenger telecommunications. In 1997 GTE sought unsuccessfully to acquire MCI Communications, which instead entered into a merger pact with WorldCom, which GTE opposed in regulatory proceedings and in court. Meanwhile, GTE is now pursuing a merger with Bell Atlantic. GTE had revenues of $23 Billion in 1997, and a market capitalization of $56.58 Billion on October 30, 1998. See also, GTE website and GTE website ADSL website section. |
| LEC. Local Exchange Carrier. A local phone company, such as a BOC (Bell Operating Company) or an independent (such as GTE). Since deregulation in 1996, there have been two types of LECs: ILEC (Incumbent Local Exchange Carrier) and CLEC (Competitive Local Exchange Carrier). |
| CLEC. Competitive Local Exchange Carrier. A class of company created by the Telecommunications Act of 1996 which competes on a selective basis to provide local telephone, and other, services. CLECs generally want ISP connections to be treated as local rather than interstate service by regulatory agencies. |
| ISP. Internet Service Provider. |
| FCC. Federal Communications Commission. The FCC is a federal regulatory agency which was created by the Communications Act of 1934, and now has vast authority to promulgate regulations, set prices, and/or fix technology standards with respect to many areas of interstate commerce, including broadcast radio and television, cable service, and wireline and wireless telephone services. The FCC was created as a "New Deal" era agency to regulate government sanctioned monopolies. It remains a large and slow moving bureaucracy incapable of keeping pace with the rapidly developing Internet technology. Also, despite judicial and legislative mandates for deregulation, it retains its preference for monopolies and top down government industrial planning over free market competition. See, FCC website. |
| NTIA. National Telecommunications and Information Administration. Part of the Department of Commerce. |
The Federal Communications Commission (FCC) issued its 19 page Memorandum Opinion pursuant to GTE's application (Transmittal No. 1148 filed May 15, 1998) that its ADSL service be tariffed as an interstate service. (See, CC Docket No. 98-79.)
Specifically, the FCC Opinion stated that: "In this Order, we conclude our investigation of a new access offering filed by GTE that GTE calls its DSL Solutions-ADSL Service ("ADSL service"). We find that this offering, which permits Internet Service Providers (ISPs) to provide their end user customers with high-speed access to the Internet, is an interstate service and is properly tariffed at the federal level." (See, Paragraph 1, page 1.)
The FCC opinion reasoned that "the Commission traditionally has determined the jurisdictional nature of communications by the end points of the communication and consistently has rejected attempts to divide communications at any intermediate points of switching or exchanges between carriers." (See, Paragraph 17, page 10)
The FCC concluded "that the communications at issue here do not terminate at the ISP's local server, as some competitive LECs and ISPs contend, but continue to the ultimate destination or destinations, very often at a distant Internet website accessed by the end user. The fact that the facilities and apparatus used for GTE's ADSL service offering may be located within a single state does not affect our jurisdiction." (See, Paragraph 19, page 11.)
CLECs and ISPS had submitted comments to the FCC arguing that GTE ADSL service ought to be treated as local, rather than interstate. (See, Paragraph 15, pages 8-9.) Several state public utility commissions have reached that determination. ILECS filed comments urging the FCC to find ADSL service to be interstate.
Larry Irving, head of the NTIA, filed a comment with the FCC recommending that, "the services at issue are interstate in nature. The Commission should therefore permit the associated tariffs to go into effect, subject to the conditions discussed below. The Commission should make clear, moreover, that its decision (1) does not address the jurisdictional classification of dial-up calls to ISPs; (2) does not disturb myriad State commission rulings that, under existing interconnection agreements, such calls were intended to be treated as local calls, thereby obliging ILECs to compensate competitive local exchange carriers (CLECs) for dial-up calls to ISPs that are terminated via CLECs' facilities; and (3) leaves in place the long-standing access charge exemption for ISPs and other information service providers."
However, the FCC limited its decision to the dedicated line GTE ADSL service only. It stated that it has yet to ruled on ISP conncections generally. The FCC Opinion stated: "We emphasize that our decision concerning the jurisdictional treatment of GTE's ADSL service is limited to the transport of data from an end user over GTE's frame relay network. Regulation of circuit switched voice and data calls carried over the same ADSL-conditioned loop, as part of the end user's standard residential or business service, is unaffected by GTE's offering and this decision." (See, Footnote 1, page 1.)
The FCC Opinion also stated that "our decision in this proceeding relates only to the jurisdictional treatment of the high speed access connection between an end user subscriber and an ISP, as described in GTE's tariff. We make no determination in this Order concerning whether incumbent LECs should be required to pay reciprocal compensation when they exchange Internet traffic with competitive LECs." (See, Paragraph 29, page17.)
The FCC also issued a separate press release on Friday, October 30. It stated: "The Commission intends to address next week, in a separate order, the broader issue of whether conventional dial-up access to the Internet, made through calls to information service providers, including Internet Service Providers (ISPs), is local or interstate in nature. That decision will address whether incumbent local telephone companies may be required to compensate their competitors for handling calls made by the incumbents' customers to ISPs that are the competitors' customers."
Commissioners Harold Furchtgott-Roth and Gloria Tristani also wrote a separate opinion, dissenting in part from the FCC Opinion. They concurred in the decision as to the GTE application, but objected to the FCC's decision to rapidly resolve the larger question of jurisdiction over ISP traffic. They wrote that: "We write separately, however, to express our unwillingness to address the broader issues related to the jurisdictional nature of ISP traffic in this proceeding."
The FCC, they wrote, has not adequately examined the issue, and faces no deadlline for making a decision. "If we proceed rapidly with a solution that has not been fully vetted, we will create even greater uncertainty in the market, raising the specter of possible defeat in court, and exacerbating an already difficult market condition. Such a result will have benefitted no one but the litigation profession."
GTE issued a statement after the ruling was released: "GTE is pleased with the Federal Communications Commission (FCC) order ruling that the company's high-speed Internet access service offering is correctly tariffed at the federal level. With this ruling, the FCC has removed a barrier towared enabling braod-based deployment of this remarkable service."
"Just last week, the International Telecommunications Union voted on the G.lite ADSL standard -- a consumer-friendly standard that will accelerated the deployment of easy-to-install ADSL service for consumers. GTE has conducted successful tests of this new standard, and expects it to become abailable to consumers next year."
GTE currently offers various ADSL services (at upstream speeds ranging from 256 kpbs to 1.5 mbps) in selected areas of metropolitan Los Angeles, Dallas, Seattle, Tampa, Clearwater FL, Honolulu, Lafayette IN, Terre Haute IN, Columbia MO, Durham NC, Columbus OH, Portland OR, Beaverton OR, and College Station TX.
Similarly, Robert Blau, BellSouth's VP for Executive and Federal Regulatory Affairs said the following: "We think the FCC's ruling on the GTE tariff is consistent with the argument we've been making at state commissions, which is that calls to the internet are interstate in nature and not local. We're glad the FCC has 'concluded that the communications at issue in this proceeding do not terminate at the ISP's local server, as some parties had argued, but continue to their ultimate destination or destinations, very often at an Internet web site in another state.' This ruling supports BellSouth's view that reciprocal compensation payments do not apply to calls made to the Internet."