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FCC To Revise Rules on Phone Connection and Internet Access

By Stephen Labaton

The New York Times -- WASHINGTON

Homes could start being connected to the Internet through electrical outlets, and consumers and businesses may find it easier to make cheaper telephone calls online under new rules that the Federal Communications Commission began preparing on Thursday.

Taken together, the new rules could profoundly affect the architecture of the Internet and the services it provides. They also have enormous implications for consumers, the telephone and energy industries, and equipment manufacturers.

Michael K. Powell, the FCC chairman, and his two Republican colleagues on the five-member commission said the twin moves - and a separate vote to allow a small company providing computer-to-computer phone connections to operate under different rules than ordinary phone companies - would ultimately transform the telecommunications industry and the Internet.

“This represents a commitment of the commission of bringing tomorrow’s technology today,” Powell said. He added that the rules governing the new phone services would seek to make them as widely available as e-mail, and possibly much less expensive than traditional phones because they would have lower regulatory costs.

At the same time, once the rules allowing delivery of the Internet through power lines are finalized, companies could provide consumers with the ability to plug their modems directly into wall sockets just as they do with any toaster, desk lamp or refrigerator.

Under the new rules, which are expected to be completed in coming months, electric utilities could offer an alternative to the cable and phone companies and provide an enormous possible benefit to rural communities which are served by the power grid, but not by broadband providers. A number of utility companies have been running trials offering high-speed Internet service through their transmission lines.

While the technology has been developed, it is not clear whether such a service would be profitable or able to compete in markets dominated by cable and telephone companies. But FCC officials noted that the vast majority of the nation’s households did not yet have high-speed Internet service, leaving the market wide open to rivals.

In the phone proceedings on Thursday, a majority of the commissioners suggested that new Internet phone services should have significantly fewer regulatory burdens than traditional telephone carriers. The commissioners also voted 4-1 to approve the application of a small Internet company,, ruling that its service of providing computer-to-computer phone service, called Free World Dialup, should not be subject to the same regulations and access charges as traditional providers.