Beware

Posted: 05/1998

Beware:
Bell Companies Soon May Be Nipping at Your Heels

Nearly everyone agrees that the Telecommunications Act of 1996 has brought mixed
results after two years, but few are more disappointed by the slow pace of competition
than the framers of that legislation. Now, it seems, even they have had enough.

If the unprecedented barrage of letters with unsolicited advice from the powerful chair
of the Senate Commerce Committee (SCC) to Federal Communications Commission (FCC) Chair
William Kennard have gone unheeded, Sen. John McCain’s (R-Ariz.) latest warning shot
across the agency’s bow cannot be ignored. While McCain’s proposal to allow Bell companies
to enter the long distance market by a certain date seems dead on arrival this session–if
only for lack of time–it is certainly a clear signal that he believes the agency must
make more of an effort to approve the Bell companies’ entry into long distance.

More than anything, the McCain legislation reinforces Congress’ overall dissatisfaction
with the way the FCC has implemented the Telecom Act and the members’ frustration at
having the FCC ignore its attempts at oversight. Given the tendency for legislation to
percolate in Congress for a year or more before actual passage, this is the first sign
that, while Congress may not be prepared to rewrite the Telecom Act, it is prepared to
push the FCC out of the way to get things going. If McCain’s threat doesn’t spur the
agency to action, you can be sure more legislation will follow in 1999.

There might be support outside the SCC for some "tinkering" with the Telecom
Act as well. At a hearing in March, Sen. Mike DeWine (R-Ohio) floated the idea of granting
the Bells a "fast track" into long distance if they agreed to a structural
separation of the network from the rest of their businesses.

Of course, Bell entry into the long distance market by a certain date, without the
14-point checklist of prerequisites contained in the Telecom Act, is the position that was
pushed by the Bell companies (and McCain) during the years of negotiations preceding the
law’s enactment.

When news of McCain’s bill hit Capitol Hill, the five Bell operating companies behaved
almost as if they were in a "quiet period" before an initial public offering,
uttering not a word, even though they must have been joyful.

Interexchange carriers (IXCs), predictably and promptly, expressed fears that without
the "carrot" of long distance markets, local markets may never be fully opened
to competition. They’re probably right.

From the IXCs’ point of view, the only reason regional Bell operating companies (RBOCs)
have not yet been allowed into long distance markets is that they haven’t obeyed the
existing law. That, however, may not be the full story. Persistent problems with
operations support systems, arguments over Universal Service Fund contributions and the
never-ending legal battles over the constitutionality of the Telecom Act and the FCC’s
interpretation of it all have bogged down would-be competitors who remain eager to enter
the local markets. But rather than slapping the hands of the Bells or giving them a
helping hand, what truly may be needed here are some specific rules.

It seems that no one, including the FCC, is quite sure what the criteria are for the
Bell’s entry into the long distance arena. Rather than worrying about setting a date for
Bell long distance entry at any cost, perhaps Congress and the FCC should put their heads
together on ways to make the rules of the game more clear-cut for everybody so competing
telephone companies can have acceptable access to Bell facilities, the Bells can gain
access to the long distance market and long distance consumers can potentially enjoy a
broader selection of carriers and services, perhaps even by the turn of the century.

Respectfully,
Carol L. Bowers
Washington Bureau Chief