The Honorable Thomas Bliley
Chairman, House Committee on Commerce
2125 Rayburn HOB
Washington, DC 20515

Dear Chairman Bliley:

As you know, the Federal Communications Commission is currently considering strategies for encouraging the deployment of advanced services, as was required by Section 706 of the Telecommunications Act of 1996 (TA 96). In recent days, some discussions of this issue have centered on whether that section should be interpreted as an independent basis to forbear from certain pro-competitive provisions of the TA 96. Specifically, Senator Burns wrote Chairman Kennard on January 11, 1999 and criticized the Commission's conclusion that "[i]n light of the statutory language, the framework of the 1996 Act, its legislative history, and Congress' policy objectives, the most logical statutory interpretation is that Section 706 does not constitute an independent grant of authority."

Based on our review of the language of the statute and the legislative history, the Information Technology Association of America (ITAA) is convinced that the FCC's has correctly interpreted the extent of its authority under Section 706. We ask those members of Congress who contributed so much to the TA 96 to join us in support of the Commission's position. Section 706 was never intended to be used as a Trojan horse to circumvent the pro-competitive requirements of this landmark law. If the FCC were to grant the so-called 'regulatory relief' sought by incumbent local telecommunications carriers under Section 706 consumers would be the losers

The information technology companies we represent have the strongest possible interest in seeing consumers receive access to advanced broadband services as soon as possible. ITAA's 11,000 direct and affiliate member companies are involved in telecommunications, the Internet, information services, software and professional services. Many of these companies use telecommunications services to make the promise of the information age a reality by offering products and services with ever increasing speed and power.

As computing power doubles every 18 months, the limitations of analog, circuit-switched networks become all the more apparent. Picture trying to flow a raging river through a garden hose. It cannot be done.

Contrary to Sen. Burns statement that only "2% of American homes have broadband access," competitive firms are indeed moving to meet this insatiable demand for bandwidth to residential and small business, using the pro-competitive provisions of the TA 96.

As a result, ITAA strongly believes that reliance upon competitive mechanisms -- as opposed to the incumbent-centric proposals -- will best meet this surging demand. The provisions of the TA 96 encourage incumbent carriers to open up their markets to competition, while providing essential safeguards that will deter them from using their monopoly power to impede the efforts of potential rivals.

ITAA is skeptical of the claim made by some large incumbents, that the pro-competitive regulatory requirements contained in the Telecommunications Act have deterred them from deploying broadband services necessary to provide high-speed access to the Internet and other information services. The real reason for the incumbent local carriers' failure to deploy advanced telecommunications services is that, in the absence of competition, they have no incentive to do so. The best means to promote the deployment of advanced services, therefore, is to promote competition in the local market.

The current debate reflects a choice between two competing views about how to best encourage investment in new telecommunications technologies. Under one view, the regulatory regime should provide assurances that incumbent carriers must be assured of the recovery of their investment before they deploy new services. Under the other view, regulations should facilitate a competitive market - which is the best means to cure the complacency typically found in a market controlled by a single dominant provider. ITAA supports the latter view, as did the majority of the authors of the TA 96.

ITAA has previously addressed in some detail the legal argument that Section 706 constitutes an independent grant of forbearance authority. Section 10(a) of the Communications Act expressly grants the FCC authority to forbear from applying the requirements of Section 251(a) and 271 until after the Commission determines that "those requirements have been fully implemented." Congress enacted Section 10(d) in order to create a strong incentive for the incumbent local carriers to comply with the market-opening requirements embodied in Sections 251 and 271.

ITAA has also previously commented on the FCC's proposals for promoting advanced services. (For your convenience, I am enclosing a copy of those comments.) ITAA believes that the Commission's proposals to excuse the incumbent carriers from complying with certain pro-competitive requirements of TA 96 if they provide advanced services through a separate affiliate raise a real risk of anti-competitive conduct in the broadband market. As long as an incumbent and its affiliate are under common ownership, the incumbent will retain the incentive and ability to harm competition by engaging in cross-subsidization, discrimination, and "price squeeze" strategies. At best, structural separation can make such anti-competitive conduct harder to engage in and easier to detect.

At the same time, the Association has concluded that provisions requiring the ILEC to provide identical treatment to its advanced service affiliate and non-affiliated advanced service providers has the potential to foster new entry into the broadband market. On balance, ITAA believes that, if the Commission strengthens the regulatory safeguards and vigorously enforces its rules designed to prevent abuse and promote new entry, the potential pro-competitive benefits of the separate affiliate proposal will outweigh the risks of increased ILEC anti-competitive conduct.

ITAA has urged the Commission to take significant actions to facilitate entry by competitive local exchange carriers (CLECs) and other providers.

• Access to loops. Increased access to loops is critical for competitive entry. The Commission should once more reaffirm its finding that the incumbents must deploy loops that can be used to provide digital subscriber lines (DSL) service, and should issue any rules necessary to ensure prompt and full compliance with this obligation. In addition, the Commission should adopt rules to require incumbents to engage in loop spectrum unbundling. This would enable an incumbent and a CLEC to use the same loop for the simultaneous provision of voice service and high-speed data service, thereby increasing consumer choice and significantly reducing entry costs. Finally, the Commission should require sub-loop unbundling, which - in many cases - is the only feasible means for CLECs to deploy DSL services.
• Collocation. ITAA strongly supports the Commission's proposal to require incumbent carriers to provide more flexible collocation arrangements. In particular, the Association supports the Commission's proposal to require the ILECs to maximize the space available in their premises for advanced services equipment by offering competitors "cageless" collocation arrangements.
• The ITAA D-CAP proposal. ITAA has called on the Commission to initiate a proceeding to create a new category of service provider - Data Competitive Access Providers ("D-CAPs") - to transport packetized DSL traffic between the incumbent carriers' central office and an ISP's premises