[comp.dcom.telecom] FCC Report: Cable/Telco competition, Gateway trials

rh@well (02/04/89)

FCC Commissioner Patricia Diaz-Dennis charmed about 100
Washington lawyers, reporters, trade association representatives
and consumer activists at a "brown bag lunch" Thursday (2 Feb) as
she argued that the American public would benefit from
competition between cable-TV and telephone companies in the
development of broadband services.  She may not have changed
many minds, though, because fundamental questions about how such
competition would be structured were left unanswered.

At least initially, "video services are the most promising area
of competition" between cable and telcos, the Commissioner
asserted.  "For consumers, the promised land would be video on
demand" - no need to rent tapes or wait for the network to
schedule a particular program.  One-way broadband delivery
coupled with 2-way narrowband signalling thus might be the way
such systems would start off.  But Ms. Diaz-Dennis wouldn't
predict the kinds of services that might prove popular later on.

The FCC should encourage cable systems to experiment with optical
fiber, she said, to start validating the predictions made by
the industry in numerous filings at the Commission.  On the other
hand, telcos shouldn't be allowed to enter the broadband service
field simply by buying existing cable systems, she cautioned.
She favors requiring telcos to build new systems from
scratch.  She also felt that telcos entering the broadband field
should be required to operate as common carriers, and to the
extent that broadband services are unregulated, the system costs
should not be added to the phone system rate-base.

During the question period following her presentation, Gene
Kimmelman, head of the Consumer Federation of America, asked
if cable TV companies offering competing broadband services would
likewise have to act as common carriers.  Ms. Diaz-Dennis said
she'd reached no conclusion on that yet, but recognized it
would be a big change in the way cable systems operate.  Would
prices for broadband services be regulated or set by
competition?  Would they be allowed to subsidize - or be
subsidized by - other communications services?  Would channels
have to be set aside for community organizations and free public
access, as most cable franchises now require?  What about the
impact on over-the-air broadcasting and FCC spectrum allocation
decisions generally?  These questions were addressed -
inconclusively.  They are, of course, difficult ones, with no
clear consensus yet on the proper answers.  We'll just have to
wait for the results of the Commission's current inquiry on
telco entry into the field of cable.

In other FCC news, NYNEX has petitioned for a ruling on whether
the company's proposed gateway, "INFO-LOOK," can be considered as
a "basic service."  NYNEX had listed it as such in its Open
Network Architecture plan last winter, and recently tested it
successfully in Vermont.  The NYNEX petition, filed on 17 January
1989, argues that INFO-LOOK is different from other proposed
gateways, (which are generally considered "enhanced" rather than
"basic" services), and is more analogous to existing "basic"
network services such as directory assistance.  Should the
Commission not rule on this issue, NYNEX asks permission to
conduct a 3-year trial of its "basic gateway" anyway.

Finally, the Commission approved a waiver request by Southwestern
Bell, to allow market trials of enhanced voice and data gateway
services in Houston, Texas for approximately one year starting 1
March 89.  The Commission added that other Bell regionals can
conduct similar trials in their service areas if they meet these
conditions:  the trial lasts less than 8 months;  costs are
allocated according to the approved Cost Allocation Manuals;  end
users must be informed that prices and services available during
the trial may not be available later on;  competing enhanced
service providers (ESPs) must receive equal access at equivalent
prices for all basic services used in the trial;  ESPs are
informed of the trial's start at least 90 days in advance;  and
CPNI and network disclosure rules must be observed.  The Bell
companies must also notify the Commission 90 days before
commencing a trial, describing the service and how the above
conditions will be met.  For more information, see "Memorandum
Opinion and Order," CC Docket No. 88-616, released 30 January 1989.