SBA Division Asks FCC For Closer Copper Review

Telecom Policy Report, May 14, 2007

Last week, the Office of Advocacy of the U.S. Small Business Administration wrote a letter to the Federal Communications Commission, asking it to conduct further economic analysis and public review of the retirement of the nation's copper network infrastructure by incumbent telephone companies as they move more to fiber and other methods of providing broadband communications.

In a letter to Chairman Kevin Martin, Thomas M. Sullivan, chief counsel for the SBA Advocacy, and Cheryl M. Johns, assistant chief counsel for telecommunications, wrote that while the SBA "commends the Commission's dedication to the President's Broadband Policy Initiative, we believe the heightened pace of copper retirement warrants further economic analysis. Such an analysis may show that allowing companies to continue to develop and utilize the copper network will further the Administration's broadband policy goals. Advocacy believes that the FCC should conduct a rulemaking on this issue and undertake the appropriate economic analysis. This would give small businesses the opportunity to comment on copper retirement and put forward meaningful alternatives."

It continued, "A rulemaking would provide small businesses with a visible avenue in which their voice can be heard on this issue. Moreover, opening the copper retirement issue for notice and comment will foster transparency, and enable the Commission to make a better informed set of decisions."

The SBA Advocacy told the commission that it has been told by small businesses across the country that incumbent local exchange carriers (ILECs) have filed petitions with the FCC for its permission to "retire" portions of their copper networks that still connect "the majority of consumers and businesses." However, if the FCC grants these petitions, "this accelerated regulatory movement may inhibit small business participation in the market for telecommunications services. Many small carriers rely exclusively on copper to conduct their business, and the FCC's Part 51 rules fail to consider the potential negative impact of unilateral network modifications on small businesses," the SBC wrote. "The rulemakings from which these rules were promulgated never considered the economic impact of the final language, and failed to offer any meaningful alternatives."

And worse: "The current FCC rules allow the ILECs to deny small businesses access to the fiber networks now being deployed. This could force competitive local exchange carriers, many of which are small businesses, out of the market," the SBC pointed out. "Because the copper-retirement process will have this significant economic impact on small businesses, Advocacy recommends that the commission open a rulemaking to better examine the effect of copper retirement on the U.S. telecommunications market."

The SBA also asked the FCC to consider the following regarding copper removal:

>>How will immediate copper retirement impact the competitiveness of the U.S. telecommunications market and unnecessarily burden small businesses?

>>What increases in costs will be involved for small business customers that currently receive service over copper?

>>What emerging businesses are developing new ways to utilize copper to deploy advanced telecommunications and broadband services in the U.S. market?

>>What safeguards will exist for small businesses in the wake of a disaster such as 911 or Katrina if the new network fails, given there is no backup system?

>>Could the existing copper be auctioned, leased or otherwise utilized to avoid undue waste?

The Advocacy concluded its letter with, "The FCC would benefit from more transparent analysis and comments from small business, both of which can be facilitated by a rulemaking on copper retirement. Advocacy pledges to assist the FCC in initiating such a rulemaking and engaging the business community throughout the process."

One Carrier Weighs In

"This letter speaks right to heart of the matter on this issue and sends a clear message that the nation's copper networks are vital to broadband deployment in this country and should be maintained," says Heather Burnett Gold, senior vice president/external affairs at XO Communications. "At a time when the United States continues to fall behind the rest of the world in broadband deployment and growth, the FCC is allowing the Baby Bells to remove a national asset that is being used to deliver faster and faster broadband services to millions of consumers and small businesses. We call on the FCC to follow the requests of the SBA Advocacy in the interests of the millions of small businesses and consumers that depend on copper."

In separate but related news, Brandon Stephens, representing the Eastern Band of Cherokee Indians and chairman of BalsamWest FiberNET LLC, a fiber optic- based wholesale telecommunications carrier, told the House Small Business Subcommittee on Rural & Urban Entrepreneurship last week broadband technologies can increase investment and employment in rural communities, but are not yet being used to their full potential.