Babbio Bashes Price Regulation
This is the picture Verizon Communications Inc. (NYSE: VZ) vice chairman and president Lawrence T. Babbio painted of the telecom industry in his keynote speech at Supercomm 2002 today (see Verizon Bigwig Addresses Supercomm). And of course, there was nothing Marxist about it.
“I am absolutely proud to be a part of this industry,” he said. “[But] I would contend today that we’re out of balance.”
The imbalance, he said, is a result of the continued regulation of the prices regional Bell operating companies (RBOCs) can charge their competitors for access to their facilities. Verizon and other Baby Bells have long claimed that the regulations, which were upheld in the Supreme Court last month, cause unnatural and unfair prices (see Supremes Rule for Competitive Carriers). These, in turn, are delaying broadband deployment and are at least partially responsible for hindering the telecom industry from returning to profitability, they insist.
So what can we do to restore growth in the industry? The answer is simple, in Babbio's view: Deregulate DSL.
Of course, not everyone agrees with him. “This is not about deregulation, but about de-monopolization,” says Jonathan Askin, general counsel for the Association for Local Telecommunications Services (ALTS). “[The Bells] want to maintain their stranglehold control on captive consumers. The Supreme Court put to rest all of [their] absurd charges.”
Askin insists that it is now both easier and safer to deploy DSL, since the RBOC’s competitors will take on part of the cost, and they won’t have to bear the entire risk alone.
“It’s clear that both the RBOCs and their competitors are making substantial investments,” Russell Frisby, president of the Competitive Telecommunications Association, agrees. “[Babbio] says [the RBOCs] are eager to level the playing field. They’re eager to level the playing field by driving their competitors under it.”
Babbio, on the other hand, claims that it’s the RBOCs that are being driven under the playing field by policies that discourage, instead of encourage, companies like Verizon from investing in building out their broadband networks. It is time, he said, for regulators to step aside and allow the market to dictate which companies stay in the game.
Whether or not deregulation happens, and despite all the hardship the industry has faced over the past two years -- plagued by a rash of bankruptcies, restructurings, and plummeting stock prices -- Babbio says he's confident about the future of both Verizon and the overall industry. “This is an industry that still has great, great potential."
— Eugénie Larson, Reporter, Light Reading