FTTH Council to FCC: Don’t reclassify broadband

AUGUST 5, 2010 -- In comments filed yesterday in the Federal Communications Commission's (FCC’s) "Third Way" or broadband reclassification proceeding, the Fiber-to-the-Home (FTTH) Council conveyed its opposition to the FCC's proposals to reclassify broadband services. Such a move would require FTTH service providers to offer wholesale access to their networks to unaffiliated entities, significantly diminishing the business case for next-generation broadband deployments, the council asserted.

The FCC's "Third Way" proposal would change how the agency oversees broadband service from relatively light-touch Title I regulation to more intensive Title II common carrier regulation. The FTTH Council argued that reclassification "would measurably increase the risk associated with investing in newly regulated markets where regulatory requirements are uncertain and where proposed regulations are certain to be subject to many years of litigation. The mandated sale of wholesale access on FTTH networks and increased risk of investment would undermine the economic rationale for FTTH deployment, leading to substantially lower levels of investment in the technology than would occur if there were no regulatory change."

To support its position, the FTTH Council pointed to examples of open access FTTH networks that have not proven to be economically self-sustaining through customer revenues alone. The council also cited a new study by the consulting firm CSMG that asserts that the number of households that can be served economically by FTTH networks would be reduced by about half under the circumstances envisioned in the proposed regulatory changes.

The council noted that "the tremendous growth of FTTH networks over the past decade owes much to the FCC and its key deregulatory decisions, which removed burdens to share network components or services with entities that had not incurred the major risk of constructing infrastructure."

FTTH networks now pass more than 18 million homes in the U.S. and are connected to 6 million subscriber households, according to the council. Yet, the FTTH Council said, FTTH networks are still accessible to only 15 percent of homes in the U.S., largely because "deploying FTTH networks continues to be very capital-intensive with a long payback period. In such an environment, imposing any additional regulatory burdens would only increase the challenges to investment and act as a drag on growth."

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