The warring factions of the telecom industry reiterated their call-to-arms this week during the fifth-year anniversary of the signing of the Telecommunications Act of 1996, in large part to keep the act intact. It all has been an ongoing battle since the act became federal law, but chances are more real this year that the Telecom Act faces real challenges ahead.
In the middle of the battlefield stands the new chairman of the FCC (www.fcc.gov), Michael K. Powell, a Republican who says he’s dedicated to deregulation. On either side of him sits the lobbyists for the competitors and resellers, equally balanced by those for the incumbent local exchange carriers (ILECs). Somewhere above all of them is Congress, where the final curtain shall fall.
In typical fashion, the anniversary date of the Telecom Act marks a time when the battle lines for the year ahead are re-etched and the warriors lay out what they need in order to consider the act a success. It all has been an ongoing battle since the act became federal law.
Members of the Competitive Telecommunications Association (CompTel) (www.comptel.org), for instance, today vowed to “break the bottleneck,” the Bell companies’ stranglehold over local market access.
During a CompTel press briefing in Washington, D.C., four CEO representatives of the CLEC and ISP industries said that while local competition is increasing, the anticompetitive business practices of the RBOCs remain a major impediment to competition and CLECs and ISPs still face an uphill battle.
They noted that all market entry methods - interconnection, resale and UNEs - are being delayed by a lack of enforcement. The CEOs - from Grande Communications (www.grandecom.com), IP Communications Corp. (www.ipcommunications.net), Internet Commerce and Communications (www.incc.net), and Network Innovations Inc. (www.nii.net) --- plan to lobby lawmakers over the next few days and CompTel sent a letter to all 535 members of Congress supporting the pro-competition tenets of the 1996 act.
“This is a critical year, as we face the very real possibility that the Bell companies could remonopolize the industry,” said H. Russell Frisby Jr., president of CompTel.
CompTel says that lawmakers and regulators must:
1. Enhance enforcement efforts with meaningful antitrust remedies to prevent the Bells from continuing to leverage their local exchange monopolies to control the market for Internet access and broadband services;
2. Enhance local market access rules to provide for all market entry strategies to really work;
3. Stop RBOC interLATA data relief legislation; and
4. Support a stronger FCC by giving it the authority to impose more stringent economic penalties and disincentives.
The Bell companies “have waged a five-year campaign of lawsuits, delaying tactics, and non-cooperation to prevent the act from being fully implemented,” Frisby said. “The problem and its solution lies with local market access. The four behemoth Bells have yet to relinquish their stranglehold and are stronger than ever—squeezing out competitors with surgical precision and targeting advanced services competitors to extend their monopoly into the Internet and advanced services markets.”
FCC Chairman Powell, during his first meeting yesterday with reporters, said that he supports deregulation of the industry, instead letting market forces take command. The FCC will take a more "quasi-legislative" approach to regulation, being more cautious about dealing with the so-called Digital Divide, and on imposing conditions on mergers, Powell said.
He also said that as the federal agency tries to keep pace with an industry that’s operating on “Internet time,” the agency will be “restructured to optimize efficiency.” The FCC must work faster with fewer resources, Powell said.
The object, according to Powell, is to take a coherent approach to local competition of which deregulation is just a part.
Deregulation more generally is a major part of the heated arguments between the battling companies right now. Competitors feel that if the Telecom Act is reworked, giving the Bells certain regulation relief, that they will suffer. The Bells, on the other hand, favor less regulation as a way for the local market to naturally open up to competition.
For instance Tom Tauke, senior vice president for public policy and external affairs at Verizon Communications Inc. (www.verizon.com), says that a key objective of the Telecom Act -spurring the development of advanced telecommunications services - is in serious jeopardy if the Bells aren’t given interLATA data relief.
“Our greatest challenge [this year] will be to stop the regulatory creep - that is to keep regulation meant for yesterday's telephone markets from migrating to the Internet world of advanced services and broadband deployment,” Tauke said. "The government must adopt a regulatory framework that encourages competition, innovation and investment in broadband technologies."
Verizon is in the final stages of review of its application to offer long-distance service in Massachusetts. The FCC should complete its review by the end of April. Verizon then expects to file the remaining applications in 11 other states by mid-2002.
Ernest B. Kelly III, president of the Association of Communications Enterprises (ASCENT) (www.ascent.org), predicts that the RBOCs - having failed over the past five years in the markets, the regulatory arenas, and the courts in their efforts to keep the markets closed - will redouble their efforts in Congress to stifle competition however they can.
“No doubt they will have allies in this effort and those who believe in the promise of the '96 Act are in for a long siege,” Kelly says. “We are confident in the end the Congress will not undo what took 17 years to achieve, namely a mechanism to open up the last phone monopoly, local service, to competition.”
