A matter of policy

Nov. 1, 2004

With Election Day in the United States arriving this month, and a spate of recent rulings from the Federal Communications Commission (FCC) and state regulatory agencies preceding it, now is a good time to consider the effect of policy on telecommunications. Of course, some folks appear to have telecommunications policy uppermost in their minds at all times; witness the constant drumbeat from the regional Bell operating companies (RBOCs) concerning UNE-P and other aspects of line sharing. The “get government out of our business” chant was full throated at last month’s United States Telecom Association (USTA) Telecom ’04 event in Las Vegas, where USTA President and CEO Walter McCormick proclaimed that competition for local services had arrived and thus the Telecom Act of 1996 had become obsolete.

Certainly the regulatory tide has turned in the RBOCs’ favor. First, the Triennial Review gave them a virtual monopoly on fiber-to-the-premises (FTTP) infrastructure. Then the DC Circuit Court once again sent the FCC home with its tail between its legs on the issue of administering UNE-P. Most recently, the FCC granted BellSouth’s petition to extend the quasi-monopolistic benefits of FTTP to fiber to the curb.

Thus, whether you agree with McCormick’s view of the current state of local competition or not-and your opinion probably depends on where in the United States you live and whether you earn a living working in the telecommunications industry-it appears clear that due to a combination of changes in technology and the complications inherent in the Telecom Act, the telecommunications regulatory landscape needs to be reviewed.

So, what kind of change is needed? Well, those who see an opportunity to get the government completely out of the market will find themselves disappointed. If the goal of the Telecom Act was to promote competition, and Mr. McCormick is right in thinking that the assault of the cable multiple systems operators (MSOs) means someone is succeeding where most CLECs have failed, then truly there appears little reason for the government to get involved. The problem, as I implied when I said your viewpoint might depend on where you live, is that telecom offerings from MSOs are by no means ubiquitous. So any revision of the Telecom Act will have to include a government-generated definition of competition-and one set of rules for where it does exist and another for where it doesn’t (not to mention a way of transitioning from one state to the other).

The other aspect in which big government will have to get involved is in making telecom policy truly national. While it may be hard for the states’ rights advocates to accept, it should not be possible for a state public utility commission to countermand FCC policy. The recent ruling in California, where the public utility commissioned decreed that Verizon had to unbundle its packet voice network contrary to the policies laid forth in the FCC’s Triennial Review, opens a scenario where national operators would have to go to Washington for a general set of rules, then travel state to state to see how those rules would be applied. Needless to say, this leads to potential chaos, unnecessary expense, and uneven deployment of services. There needs to be one set of rules (within the context of determining competition, as I explained above) applied evenly across the country.

Speaking of one set of rules, if Congress determines that MSOs are competing with telephone companies on a level footing, that means they should be subject to the same regulations. Particularly as both parties strive to provide the triple play of voice, video, and data, the heritage of the service provider becomes meaningless-they are just “service providers,” offering very similar products.

Of course, that works both ways. Thus, Congress may have to review whether the telephone companies need to jump through the same hoops through which the cable companies have leaped to win franchises. If not, then cable companies should be able to retire their jumping shoes as well.

It will be interesting to see how much the MSOs and the RBOCs work together in making a revision of the Telecom Act a reality. Brian Roberts of Comcast touted such a partnership during a keynote address at Telecom ’04, in which he said that incumbents and MSOs should work together to promote facilities-based competition as both real and sustainable to Congress and policymakers, particularly if the Telecom Act is rewritten. If the attendees of Telecom ’04 and the companies they represent are smart, they’ll do just that.

Whoever wins office in this month’s elections will have plenty to occupy them as the new term begins. But setting new standards for telecommunications policy should not be delayed. The questions are difficult and will require a significant amount of thought and negotiation. But the benefits to the country are too significant to be ignored.

Stephen M. Hardy
Editorial Director & Associate Publisher
[email protected]

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