WASHINGTON-While the network-neutrality issue holds up telecommunications reform, fissures in the telecom industry between big and little carriers are forming.
Generally large carriers-both wireline and wireless-oppose any attempts to legislate or regulate network neutrality. Wireless trade association CTIA in June officially came out against net neutrality based on the core belief that competition is the best regulation. With regulation, innovation and investment will be stifled; without regulation, niche markets will be created.
On the other hand, smaller carriers have been sitting on the sidelines when it comes to network neutrality. For small wireless carriers, the reasons are pragmatic, says David LaFuria, outside counsel to the Rural Cellular Association.
“Small wireless carriers are more concerned about building the network than offering the latest bells and whistles,” said LaFuria. “Where you have slower download speeds, network neutrality is not an issue.”
The wireless industry has been largely ignored in the network-neutrality debate even though the nation’s two largest carriers already restrict access to Voice over Internet Protocol, video and other bandwidth-hogging services. The prohibitions contained in data-customer contracts are done for service-quality reasons.
“The wireless networks are very dynamic. There is a relationship between the device and the network,” said Carolyn Brandon, CTIA vice president of policy. “We need to have control over that relationship. The network-management needs we have are unique because of the radio-frequency aspect.”
Some of the legislation surrounding network neutrality did not acknowledge the differences in the wireless-broadband experience vs. the wired experience.
On the wireline side, the rural industry has recently shown a different view of the network-neutrality issue. Rural wireline carriers are concerned about connecting their users to the backbone network.
“We are caught in the middle between the large network providers and the large edge providers,” said Chad Miles, chairman and president of Enhanced Telecom Corp., based in Sunman, Ind., and chairman of the Organization for the Promotion and Advancement of Small Telecommunications Companies. “We can control speeds between the end user and our network, but we cannot control the backbone speed.”
The large wireline carriers-both telecommunications and cable-claim network-neutrality rules will thwart investment in rural America, but Miles said the majority of rural carriers already offer broadband to their customers.
Recently Miles met with several staffers at the Federal Communications Commission to discuss merger conditions on AT&T Inc.’s proposed acquisition of BellSouth Corp. AT&T and BellSouth compete for access to and facilities for the Internet backbone and the combined companies could have a negative effect on small rural companies.
“In some cases, AT&T and BellSouth, individually, are able to dictate the rates and terms that they charge rural local exchange carriers for access to their networks. This demonstrates that they have unchecked market power and that RLECs do not have sufficient competitive alternatives,” said Stuart Polikoff, OPASTCO director of government relations.
This argument appears to be very similar to the special-access argument being made by Sprint Nextel Corp. Special access is a term to describe the dedicated lines used to carry traffic from a wireless base station to a mobile-switching center and/or onto the public switched telephone network. Sprint Nextel in June told the Senate Commerce Committee that 99 percent of the special-access lines it uses are controlled by Bell operating companies.
Sprint Nextel made a big push for special-access reform and was pleased when Sen. Daniel Inouye (D-Hawaii), ranking member of the Senate Commerce Committee, made it a part of his draft bill. However, Sen. Ted Stevens (R-Alaska), chairman of the Senate Commerce Committee, did not accept the addition and an Inouye amendment was watered down behind the scenes.
But while there may be some connection between special access and network neutrality, Sprint Nextel said they are very different.
“There is one-special access-where there is a clear market failure but there is one-network neutrality-where it clearly hasn’t happened,” said Leigh Horner, spokeswoman for Sprint Nextel.
Miles recently told OPASTCO members at the organization’s summer convention in rural Virginia that it is important for small carriers to stick together, especially in instances, like network neutrality, where their interests differ from the larger carriers.
