TCS Daily


Congress' Closure Won't Ring Down Curtain on Bells

By Duane D. Freese - October 16, 2000 12:00 AM

Telecom consumers and investors soon can stop holding their collective breaths. Congress is about ready to adjourn. And luckily it has done just about nothing to affect them, at least for now.

It had threatened to do plenty. Among this year's non-accomplishments for the nation to be grateful was legislation that would have stolen money from competitive local exchange carriers and another that would have scuttled key provisions of the Telecommunications Reform Act of 1996.

Behind these measures - the regional Bell operating companies. In pushing them, they were doing what they've done for the past decade - talking big about advancing the telecommunications revolution while dragging their feet every step along the way.

When I first began writing editorials about telecommunications policy for USA TODAY in the early 1990s, I was enthralled by the vision top executives of regional Bell companies would present when they met with the paper's editorial board. They told us how fiber optics and cable connections into the home would change the world, bringing such wonders as video on demand, distance learning, and medical services in the home, all through the phone.

Well, much of that is starting to happen. But with little thanks to the regional Bells. Indeed, if the Bell's had had their way, the Internet revolution wouldn't have taken off at all.

In the mid 1990s, just as people and businesses were beginning to connect to the Internet, PacBell, later swallowed by Southwestern Bell as part of SBC, was pushing the California Public Service Commission for per minute rates. They said they needed the money to expand their systems to accommodate all the extra traffic. Fortunately they didn't get it. And the Federal Communications Commission established rules that kept calls to ISPs being treated as other local ones. This year's attempt to get Congress to strike down reciprocal compensation plans that the Bell's initially pushed upon Competitive Local Exchange Carriers echoes that ancient effort. They want to eliminate payment for the calls completed by CLECs to ISPs, claiming because ISPs tie people to the Internet that the calls should be treated as long distance, overturning longstanding national policy.

Ignored in this is the that the CLECs have spent more than $30 billion expanding the local network with their own fiber optic cables and digital subscriber lines so the Internet doesn't clog the slow copper, plane old phone service that local Bells provide.

Meanwhile, the second major unenacted piece of legislation - the so-called Internet Freedom and Broadband Deployment Act proposed by Rep. John Dingell, D-Mich., and Billy Tauzin, R-La. -- pretends that if the Bells themselves provide high-speed lines that connect people to the Internet that it's just like a local phone call. Only this time if the Bells provide the line they'd also have the right under the bill to provide long distance data transmission.

Since digitization makes packets of speech and data indistinguishable on high-speed phone lines, granting the Bell's the right to long-distance data communication would get them into long distance service.

It would remove any real incentive for the Bell's to open up the local loop to competition. They promised to do that during negotiations on the Telecommunications Reform Act of 1996 in return for being allowed into long distance service, then seen as the moneymaking jewel of telecommunications before the Internet became king. But the Bells reneged on that promise as they did on earlier ones, fighting against FCC rules in court. When the Supreme Court upheld most of the rules in 1999, the Bells shifted their efforts to Congress to get around the law. The Dingell-Tauzin bill is the result.

Finally, some members of Congress and communities, egged on by the Bells, want to tie cable companies up in rules that were meant to govern the Bell monopolies. Such things as open access, which would force cable companies to accept any ISP if they provide a cable link to the Internet, would preclude cable firms from getting a return on their hefty investment in broadband. It would accomplish the same thing as the federal rate caps placed on cable in the early 1990s, keeping them from raising capital to compete with the Bells for local service.

The reform act of 1996 ended that. But it has yet to fully pry open the local exchanges. The Bells and other so-called incumbent local exchange monopolists still have 95% of the nation's local phone customers. One would think Congress would get tired at them for flouting the 1996 law. Instead, they write bills that give them hope.

Luckily, none of their measures passed. But considering the Bell's persistence, you can bet they'll be back, as either Tauzin or Dingell, depending on which party controls the House, will head the committee overseeing the laws affecting telecommunications next year. That will make stopping backward legislation even tougher.
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