Verizon's Babbio Rips FCC's Ruling Delays

ASPEN, Colo. -- According to Verizon vice chairman and president Lawrence Babbio, the nation's biggest phone companies are tired of waiting for the FCC to implement clear line-sharing rules, so they're taking the commission to court -- again.

"Time's up," said Babbio, during his keynote speech Tuesday at the Progress and Freedom Foundation's Aspen Summit conference, explaining why Verizon and Qwest filed suit Monday in a federal appeals court to force the FCC to come up with definitive rules on the line-sharing, or "unbundling" situation, rather than delay the decision for another six months, as the FCC declared it would do last week.

The lawsuit is just the latest chapter in the unbundling saga, which began when the 1996 Telecom Act included provisions forcing incumbent local service providers like Verizon to open up their local loops to competitors, at rates determined by regulators. Since the Act's inception, the unbundling argument has continued apace; earlier this year the FCC's latest attempt to implement the rules was shot down by the courts, prompting the commission to issue a ruling last week that attempted to buy more time to figure out a workable implementation.

For the FCC to come out with a rule that protects the status quo and doesn't clearly stipulate what might happen in the future was unacceptable for companies like Verizon, said Babbio. Such a rule, he said, would put the companies in the position of risking investments in physical infrastructure without any guarantees on being able to control the returns on those investments.

"The real reason [for the latest lawsuit] is that the FCC hasn't done their job for the last eight years," Babbio said. "After eight years, they still haven't gotten it right. And we'll haul them back to court every time."That Babbio and Verizon disagree with the basic premise of unbundling was made clear during his keynote speech, which centered mostly on Verizon's strategy of building fiber networks directly to consumer and business premises, a business decision that involves a great amount of risk, Babbio said.

"There has to be no unbundling of newer broadband networks," Babbio said. "Why apply logic that was irrational in the first place to fiber, which is a high-risk business? It only destroys [business] incentive [to invest]."

Babbio also called for a national policy on broadband services, as well as no "economic regulation" on new broadband services.

"It would accelerate our fiber to the premises rollout if we had those [conditions]," Babbio said. "And there are a lot of new applications, some we don't even know of yet, that are waiting in the wings [for faster bandwidth]."

Babbio said Verizon's fiber rollout signed up its first paying customer in Keller, Texas, on Monday, a date he said might be a "tipping point" for a faster broadband future. Verizon, he said, still plans to pass 1 million homes with its fiber rollout this year, and will soon announce six more states where the company will deploy fiber, with a goal of passing 2 million homes by 2005."We're a little concerned about the [regulatory] uncertainty, but we're optimistic," Babbio said. "If broadband expansion stalls, it could be because we're unable to let go of the regulatory incentives of the past. But we're betting that won't happen."