Untangling the Next Telecom Act

the 1996 act was not a success. The baby bells fought competition, interconnection agreements, tooth and nail and have tried to carve out the internet.

How many residential customers have much choice for local phone service, for example. Until recently, when cable started to offer it, most had none, and now have maybe just the cable company as an alternative. Even more recently, internet phone has emerged, but as a primary phone service, can be problematic. Cable necessitates bundling with cable TV.

How many realize that the 1996 bill was supposed to create competition and healthy choices for local phone service, just like we had for long distance carriers? Not many have a clue. The only fierce competition that emerged for local phone service was for business customers. This was the way competitors started out and gained an edge, by cherry-picking lucrative business customers.They never really got beyond that. The incumbent carriers were there ready to pay fines to regulators and bury their competitors in litigation.

The nutty thing too, was many new competitors were laying down their own fiber optic lines in the most business-dense areas of cities, in addition to entering into interconnection agreements with the incumbent carriers. The extra lines are pretty redundant, when you think about it. More infrastructure is OK, but redundancy over redundancy was a bit much. You have to wonder if some sorts of services should be deregulated at all. 

I haven’t seen deregulation in many industries that didn’t ultimately benefit business over consumers and raise prices, the exact opposite of the supposed intent.

Airline dereg lowered the price of airfares and long distance phone rates dropped. But the rest of telecommunications deregulation only gave companies all the benefits of their former mopnopolies and none of the state and federal oversight. This is true of energy/electric deregulation too.  We have been suckered. A new bill in the climate on Capitol Hill these days could only be a disaster.

Posted by marge on Apr 2, 2006 at 4:03 PM