The Five Stooges

The Five Stooges – R. Shemp Raynovich

February 21, 2003

4 Min Read
The Five Stooges

Funny how everybody thought the FCC might do something useful, isn't it?

Instead, in moves aptly described by Chairman Michael Powell as "Picasso-esque," the beltway bureaucrats yesterday concocted a masterpiece of conflicting policy that had small-time public utility lawyers across the 50 states throwing their caps in the air.

In a political twist, Commissioner Kevin Martin had worked behind the scenes to form a secret cabal of confused commissioners that would undermine Chairman Powell's agenda. Curley sided with Moe, but then cut a side deal with Larry. Can you say: "back-stabber"?

Powell lost control. What is it with the Powells these days? Have they lost their touch?

Get this: The two minority Democratic Commissioners, Michael Copps and Jonathan Adelstein, voted with Martin to defeat Powell's desired deregulation of UNE-P. But Martin swung to the other side for the broadband vote, siding with Republicans Powell and Kathleen Abernathy.

In short, Martin was the swing vote, and he swung both ways.
"Three more years of litigation!" cheered the lawyers. "More attorney's fees!"

It was a solution that would make any lifetime lobbyist or public utility commissioner cry with joy.

But what about those other folks? You know, like... consumers, engineers, and investors.

Well, I think, like me, they're scratching their heads. You could waste your time wading through pages and pages of pipe-smoking analysis on the pages of the New York Times or the Wall Street Journal. Or perhaps you might read Light Reading's more brief and cogent analysis: Powell Loses FCC Vote. You could also whip out your credit card (Shazam!) and purchase a single report or subscription to Optical Oracle, which just weeks ago deconstructed why politics would defuse the efficacy of the standing FCC in 2003. (If you did that, of course you would also get profiles of the commissioners and relevant industry market data, all for just $400 [single report] or $1,250 [a full year's subscription] – end of commercial message).

But, even armed with all this data and analysis, you're still likely to come to only one sensible conclusion: The FCC hasn't got a clue.

Here's why: It's all about competition, isn't it? The FCC simply hasn't concluded whether it wants to encourage – or discourage – competition. In fact, in their peculiarly schizophrenic approach, they appeared to continue regulating on part of the network but freeing up other parts. Here's the low-down of how these rules effect competition in our modern communications network:

  • The new FCC laws changed virtually nothing on the UNE-P front, but it does unbundle switching from business markets. So, in a sense, competition still exists on the switched phone front. Consmers will continue have more options. RBOCs will continue to belly-ache.

    • On the broadband front, the FCC deregulated broadband over the local loop, allowing the RBOCs more control over their broadband services on their own networks. But this has little meaning, because the real competition for RBOCs in broadband is not coming from sharing their own copper wiring – it's coming from multiple systems operators (MSOs) using entirely different systems, such as cable networks.

    • The FCC cleared the way for new investors to build and own monopolized fiber to the home (FTTH) networks. But nobody has the cojones or money to do this anyway.

      In the end, it was milquetoast policy from a split board of bureaucrats.

      What this market really needs is something more radical. Anything, really. I still hold that things would really move forward if the local loop were entirely set free. There are several ways to do this, but one I've proposed before involves some sort of mass buyout (see Hawkish on Telecom). The government could buy it, compensate the RBOCs, and spin it back out as a privatized collective.

      It's not such a crazy idea. People forget that this happened once before. It was called the "Internet." Perhaps you've heard of it.

      That would be cool. It would come with a nice catch phrase: "Free the Loop!" A freed-up and reinvigorated local loop would spur an entirely new revolution in communications and another IPO boom. Yes, the RBOC lobbyists will never let this happen. It's a shame. In the end, what's more important, the advance of the network or what Ed Whitacre thinks?

      If you have ideas on whether this can or can't happen, or variations of the approach that are more tenable, please write me at [email protected].

      The other alternative: for all the lazy, timid millionaire/billionaire investors and VCs to get off their duffs and get back and finish building the new fiber networks that fall under the FCC's new un-regulated guildelines.

      Now, that's a crazy idea!

      — R. Scott Raynovich, US Editor, Light ReadingEditor’s note: Light Reading is not affiliated with Oracle Corporation
      (nor with Orkle.Org)

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