Goodbye Fritz, Goodbye Trent, Hello Frist

Senator Eugene Fritz Hollings (D-SC) is no longer chairman of the Senate Commerce Committee—bad news for the few remaining competitors of incumbent telephone companies. During his tenure, Hollings steadfastly resisted the incumbents' campaign to control local telecommunications markets. He rebuffed the companies and their messengers, whether they were Republican or Democrat. U.S. Reps. Billy Tauzin (R-LA) and John Dingell (D-MI) made partisan peace to push the Tauzin-Dingell (TD) bill through the House and into the Senate, where Senators John Breaux (D-LA) and Don Nickles (R-OK) fashioned a "TD-lite" bill, which gave the incumbents much but not all of what they wanted. Despite being bipartisan, the Breaux-Nickles bill failed because it had no support from Hollings. His opposition to Democrats and Republicans alike proved one thing about the telecom battle in 2002: It was not a partisan issue. That was supposed to change—the incumbents' messengers were expecting former Senate Majority Leader Trent Lott (R-MS) to let them have their way with the industry, the public, and America's future.

When the Republicans lost the Senate in June 2001, Lott asked the incumbents for their support to regain control. According to a story in Roll Call Magazine, he extracted a $50,000 donation from Verizon in September 2002, after a conversation with its CEO, Ivan Seidenberg. Lott was quoted as saying, "On issue after issue, it's important for them to have us in the majority and me as Majority Leader. And I'm reminding them of that....We know who's here and who's not."

Verizon was there. Of the $2 million the company contributed directly to both parties, Republicans got 66%, according to the Center for Responsive Politics. This boded ill for the fiber business because Lott was a changed man from early 2001, when he gave only tepid support to incumbents. Back then, WorldCom, based in Jackson, MS, and generally considered a "fiber" company, was a significant employer. No more. The company's scandals brought down its reputation and stature in Mississippi. Lott believes in political reciprocity and was ready to give Verizon what it still wants. The Verizon spokesman most "in" with the Republicans is its senior vice president for public policy and external affairs, Thomas Tauke. He is a former Republican congressman who represented the district in and around Dubuque, IA, through1990, when he tried but failed to unseat Iowa Democratic Senator Tom Harkin.

Tauke landed at Bell Atlantic in 1991 and has plied his influence ever since. In June 2001, he appeared before the House Committee on the Judiciary testifying on the Tauzin-Dingell treatment of fiber optics in the loop: "While continuing line sharing over copper loops, the bill does not require line sharing over fiber, a limitation which is crucial to the industry's deployment of fiber in the local loop." The proposal can be rephrased in a tougher tone: Incumbents will not deploy fiber in the loop if they have to allow competitors access to the fiber. Two years before Verizon's proposal, its likely effect was foreseen by Prof. Marvin Sirbu of Carnegie Mellon. In June 1999 at the Federal Communications Commission's "Public Forum on a New FCC for the 21st Century," Sirbu concluded, "...I believe the first company to run fiber to the home will capture the market for all of the services and no investment banker will fund a second company to run another fiber." Thus the incumbents propose a stark bargain for America's future: fiber deployment in return for monopoly, which is a bargain only a monopoly could propose.

As cruel as the incumbents' demand is, it shows a weakened commitment to DSL technology and a grudging recognition of fiber's superiority. On the other hand, if government accedes to the demand, the remaining telecom competitors would be destroyed, and the incumbents would have dominion over voice, local, long-distance, Internet, and data and video services, thus endangering the cable industry's market.

Wouldn't the entire country be better off with fiber everywhere but no telecom competition? No, because the incumbents do not keep their end of bargains, judging from their past behavior. Despite being the dominant participant in the 1994-95 negotiations that led to the 1996 Telecommunications Act, the incumbents later challenged it as unconstitutional, losing that argument in the U.S. Court of Appeals. Twice the Supreme Court rejected their arguments that the Telecom Act was abused by the FCC and that the federal agency usurped the rights of the states. Making a deal with the incumbents is risky because they turn against it later.

Verizon's campaign contributions make it look like one of Lott's political clients. That may not be a positive factor, since Lott forgot his national responsibilities as Senate Majority Leader by waxing sentimental on retired Senator Strom Thurmond's 1948 presidential campaign for racial segregation. With Senator Bill Frist (R-TN) now the Senate Majority Leader, he should, as a national leader, put the public interest ahead of his political clients' interests.

The consequences of a politician choosing to serve clients instead of country were explained in A Question of Intent, a book written by the former head of the Food and Drug Administration, David Kessler, who incurred the wrath of the tobacco companies when he embarked on a campaign to curb their influence and wean Americans off cigarettes. Kessler explains the downside of a politician serving clients: "An advocate...knows but one person in all the world...his client. To save that client by all means and expedients, and at all hazards and costs to other persons...he must not regard the alarm, the torments, the destruction...he may bring upon others. Separating the duty of a patriot from an advocate, he must go on reckless of consequences, though it should be his unhappy fate to involve his country in confusion." Lott was an advocate. In the meantime, remember Hollings's good work.

Stephen N. Brown writes on public policy in telecommunications. He can be reached by e-mail at policywork@aol.com or telephone: 615-399-1239.

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