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Wholesale/transport services

Fed Reg Debate Heats Up

As the Federal Communications Commission (FCC)'s review of regulations in the telecommunications industry approaches completion, the cheerleaders on either side are working themselves into a lather.

Wednesday, the Telecommunications Industry Association (TIA) decided to dive into the debate headfirst. Backing up the incumbents' line of defense, the organization sent a letter to FCC Chairman Michael Powell outlining the findings of a study it has done on the link between cuts in carriers' capital spending and a decline in quality of service (see TIA: Capex Cuts Cripple Quality).

"[T]he recent and projected broad downward trends in capex should cause alarm bells to go off among regulators at every level,” TIA president Matthew J. Flanigan writes in the letter. “Concrete action must be taken quickly to restore the balance between regulation in service of the public interest and the creation and maintenance of a regulatory environment that will promote investment and shareholder value.”

The Bells have been arguing for months that the FCC should dismantle the 1996 Telecommunications Act regulations that oblige them to let their competitors lease access lines and network elements at set wholesale prices. They insist that the regulations are causing them to lose money and dissuading them from investing in their networks (see Whitacre: Regulations Will Wither, and SBC's Fed Up, But So Are Its Critics).

While TIA is pushing hard for the FCC to remove regulations on broadband, it claims not to have a position on whether or not the agency should dismantle the entire unbundled network elements platform (UNE-P). “We haven’t gotten involved in that particular exercise,” says David Owen, the chairman of TIA’s public policy committee. However, the organization’s report, which shows how Ameritech’s customer complaints exploded as the company cut capital spending in the 90s, is bound to be used by the RBOCs to support the argument for a complete end to regulations.

The report cautions that the huge reduction we’re seeing now in incumbent capital spending will have dire consequences. “Nothing good has come out of the ILECs feeling inhibited to make investments in their networks,” Owen says.

Other organizations have been voicing their support for getting rid of, or at least scaling back, regulations. Dan Phython, senior vice president of law and policy at the United States Telecom Association, speaking on a panel at the UBS Warburg telecom conference in New York yesterday, said: “If the Commission does the right thing, there will be more spending on the side of the incumbent carriers.”

At the other end of this debate, the competitive carriers and their supporters have been equally vocal in their resistance to dissolving regulations, insisting that would mean an end to competition altogether (see AT&T's Dorman Disses RBOCs, and Report: DSL Is Profitable). The Bells aren’t losing money and cutting capital spending because regulations treat them unfairly, they argue, but because they don’t know how to compete.

"The Bells need to learn to be wholesale carriers... They’ll make a lot more money if they do,” said Robert McDowell, the vice president and assistant general counsel of the Competitive Telecommunications Association (CompTel), speaking on the UBS Warburg panel yesterday. “UNE-P is here to stay... Two to three years from now, it won’t look a lot different than it does today… You can’t just pull the plug on UNE-P.”

While the FCC itself insists that no decisions have been made, industry observers believe a compromise is in the works. “There will be constraints put on UNE-P,” UBS Warburg analyst John Hodulik said after the discussion. “There’ll be something more favorable for the Bells. The question is how favorable.”

“There will be no winner,” opined Robert C. Atkinson, the director of policy research and special projects at the Columbia Business School. No matter what the FCC’s decision turns out to be, he insisted, individual states will continue to play a major role. “The FCC just couldn’t come up with an optimal decision that works equally as well in Manhattan and in Kansas."

The FCC has said that it will try to reach its decision on whether or not to dismantle the regulations by year-end, but that the process could stretch into the new year.

— Eugénie Larson, Reporter, Light Reading
www.lightreading.com
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OSPGuy 12/4/2012 | 9:20:54 PM
re: Fed Reg Debate Heats Up rjmcmahon wrote:

"Bring in somebody who understands the importnace of the null curriculum and who also understands that what is not said is as important as that that is."

Hmmm, can there be any doubt that our societies' investment in higher education is netting lower and lower returns?

Powell has the future of this industry in his hands - to continue this sham "competition by expropriation" or recognize the reality of inter-modal competition - and you want him to retire to a hilltop somewhere and meditate on what the lobbysts didn't say?! How about good old fashioned research and analysis, doesn't anyone do that anymore?

You'd be an embarrassment to our university system if you weren't so typical.
rjmcmahon 12/4/2012 | 9:20:54 PM
re: Fed Reg Debate Heats Up FCC Powell would best serve the public interest by asking congress to staff that fifth commissioner. Bring in somebody who understands the importnace of the null curriculum and who also understands that what is not said is as important as that that is.

"The null curriculum - That which we do not teach, thus giving students the message that these elements are not important in their educational experiences or in our society. Eisner offers some major points as he concludes his discussion of the null curriculum.

The major point I have been trying to make thus far is that schools have consequences not only by virtue of what they do not teach, but also by virtue of what they neglect to teach. What students cannot consider, what they don't processes they are unable to use, have consequences for the kinds of lives they lead."

http://www.uwsp.edu/education/...
whyiswhy 12/4/2012 | 9:20:53 PM
re: Fed Reg Debate Heats Up Go tell it to your local congressperson or senator: competition is the key, the last mile is the place.

'96 worked. What '96 did was to keep the RBOCs from sitting on their cash crop (voice) all the while not planting new rows (public data). Long distance is dirt cheap, and we have some DSL and some cable and some satellite and of course cellphones all over the place. The growth of cellular is a great example of how competition works.

What we need to prevent is modality or locality monopoly. As long as we have access to satellite, wireless (GGG and 802), and wired (pair and coax) at the same time, and those media are owned by competing companies...we will be fine. The FCC and the SEC need to cooperate to make this happen.

Technology and the market can sort out the rest.

-Why
rjmcmahon 12/4/2012 | 9:20:46 PM
re: Fed Reg Debate Heats Up As long as we have access to satellite, wireless (GGG and 802), and wired (pair and coax) at the same time, and those media are owned by competing companies...we will be fine.

Technology and the market can sort out the rest.
_________________

This is incorrect. It would be like Henry Ford claiming as long as we have internal combustion engines we don't need to worry about private electric utilities and their monopolies.

And even Samuel Insull didn't try to hide the fact that the last mile was a natural monopoly while facilities based competition was a sham.

http://www.eei.org/public/hist...

The FCC, PUCs and local governments must affirm open access and common carrier if our communications networks are going to take advantage of the power of things like Metcalf's law. Not to mention freedom of speech and equal opportunities.

http://www.seas.upenn.edu/~gaj...

We inherited this great country from people who understood the public good trumps that of private monopoly interests. Let us stop trampling on their legacy and learn to behave in an honorable manner.

Powell, serve your country first and foremost, staff that 5th woman, and help to clear a path towards a progessive future.
optigirl 12/4/2012 | 9:20:45 PM
re: Fed Reg Debate Heats Up Just a hunch but I bet RJ can recite the Communist Manifesto in his sleep......

:=)))))
rjmcmahon 12/4/2012 | 9:20:44 PM
re: Fed Reg Debate Heats Up Powell has the future of this industry in his hands - to continue this sham "competition by expropriation" or recognize the reality of inter-modal competition - and you want him to retire to a hilltop somewhere and meditate on what the lobbysts didn't say?!
______________

Chairman Powell does not have our future in his hands. But he could serve the public interest better if he became part of the solution instead being part of the problem.

And I didn't ask him to retire to a hilltop and meditate. I suggested filling the 5th commissioners spot with somebody who could be objective and who didn't clutter 100% of their mind with a self serving agenda.

PS. Rights of ways are public resources. If the RBOCs want to be deregulated, make them pay every single property owner for use of their rights of ways. That's the expropriation we should be concerned with.
whyiswhy 12/4/2012 | 9:20:44 PM
re: Fed Reg Debate Heats Up RC's mantra is on you're Marx, get set...

:-)

=Why
rjmcmahon 12/4/2012 | 9:20:44 PM
re: Fed Reg Debate Heats Up Just a hunch but I bet RJ can recite the Communist Manifesto in his sleep......
_______________

Optigirl; I'll defend my position by borrowing the words from a great man from Nebraska, Senator George Norris (R):

"Some kind of monopoly is necessary to get the most out of [electricity]. If privately owned, it might be operated for a time by public-spirited men. But it is human nature to get the most it can out of such a situation. Eventually it would come to tyranny.... I've been called a Communist, a Socialist and some worse things. I'm nothing of the sort. I believe in our own government. I want to protect our people in the enjoyment of those God-given things that are intended for the use of all the people. If public ownership is the proper thing, I don't hesitate to accept it, whether you call it socialistic or not."

And if I'm a communist so must be every man and women living in Nebraska, using that public power. Not to mention anybody who drives their on our *free*ways.

What's really going on here is more akin to Henry Ford trying to monopolize the TVA's production.

http://www.tva.gov/heritage/ti...

Shame on us if we don't learn from history but rather instead give away all our productivity and place it in the hands of a few monopolists.

And don't be fooled to think you will get any portion of that ill gotten wealth. You will not.
whyiswhy 12/4/2012 | 9:20:43 PM
re: Fed Reg Debate Heats Up Try the following to see why trading CA for SBC would be no better:

http://william-king.www.drexel...

The home link will give you a good review of basic economics, which you clearly need. Please read the entire site before you post again. I am sure you will greatly appreciate there is a lengthy section on Marxism, but you may not like the critique.

-Why
rjmcmahon 12/4/2012 | 9:20:42 PM
re: Fed Reg Debate Heats Up Try the following to see why trading CA for SBC would be no better.
__________________

CA representatives are elected by the public while SBC representatives are not. It's as simple as that. And one doesn't need a PhD in economics to understand that regulated public monopolies are preferred over private unregulated ones.

Imagine giving Skilling and Fastow the keys to our communications infrastructure. Wake up folks.
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