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Barriers to Entry:
Fortnightly Magazine - December 2004

had to restrict BPL operations to protect its radio licensees. But it also had to recognize that such restrictions would hamper to some degree the ability of BPL systems to compete in the broadband market. BPL investors ultimately will decide whether the FCC has achieved a proper balance in its new rules.

Access Rules

An electric utility's primary responsibility is safe, reliable, and efficient delivery of power. It is not, and should not, be permitted to compromise that responsibility to accommodate the attachment of BPL devices to its distribution lines. Section 224 of the Communications Act protects this policy. It grants only a conditional right of access to an electric utility's "poles, ducts, conduits, and rights-of-way" for the facilities of cable television systems and telecommunications service providers, which electric utilities historically have accommodated. It properly permits an electric utility to deny access "where there is insufficient capacity and for reasons of safety, reliability and generally applicable engineering purposes." It grants no right of access for the attachment of BPL facilities to an electric utility's distribution lines. Thus, BPL developers initially need to satisfy electric utilities and their regulators that BPL systems will not compromise the safety and reliability of electric power distribution. If that burden is met, policy issues relevant to access to the BPL system should be considered.

In the initial development of Internet communications, telephone companies provided the first (and last) leg of data transport through their local narrowband networks. Independent Internet service providers (ISPs) could subscribe to local telephone service lines through which their customers transmit computer-generated information to them. The ISP transforms data transmitted in telephone signal format into data packets and routes the traffic over its own packet-switched network to the intended destination, often via transmission over "backbone" long-distance networks to another ISP network. The movement of data packets over the various networks is controlled and facilitated by a nonproprietary set of protocols-transmission control protocol/Internet protocol (TCP/IP)-that do not discriminate among the data packets they route. 5

ISPs now want regulators to enforce a similar structure on all broadband transport, including that provided by telephone companies, cable operators, and, presumably, operators of BPL systems. 6 But the structure used for cable and telephone broadband transport displaces the primary value an ISP adds in dial-up (narrowband) Internet communications. The broadband transport provider itself must maintain a packet-switched network to serve and route data traffic. Moreover, the Internet has evolved into a medium of mass communications, and broadband transport makes possible new applications, such as video streaming and voice over Internet protocol (VoIP), that require more bandwidth and less variation in the rate of throughput. Centralizing traffic management function could increase network efficiency as greater and more intense demands, facilitated by broadband transport, are made on the Internet. In addition, as more commerce moves to the Internet, centralized traffic management could more efficiently serve user demands for greater privacy and security, as well as lawful government demands for surveillance capability. 7 These considerations suggest that a government mandate of open broadband transport access for ISPs may not be sound