Posted: 04/1998

GUEST EDITORIAL

By Robert M. McDowell, ESQ.

It was a drizzly February morning when I arrived at work to be
greeted by a Washington-style rumor more chilling than the
mid-winter weather. Phone calls were abuzz with whispers laden
with sincere anxiety: Bell Atlantic Corp./NYNEX was in
"secret" negotiations with the Federal Communications
Commission (FCC) to get permission to provide long distance
services in New York. This time the unthinkable would finally
happen, and this time it was a fait accompli. Or was it?
Washington, D.C. is the most notorious rumor mill on planet
Earth. Many rumors never hold water, but this one had an
inexplicable air of veracity about it.

The timing could not have been better. In hours, a few
interexchange carrier (IXC) and competitive local exchange
carrier (CLEC) members of America’s Carriers Telecommunication
Association (ACTA) and I were scheduled to meet with FCC
commissioners, members of Congress, Department of Justice lawyers
and even White House staffers about issues vital to ACTA’s core
membership: telecom entrepreneurs. Here was our opportunity to
ask policy makers directly, "Is this rumor true? Will Bell
Atlantic/NYNEX be allowed into in-region long distance?" We
asked everyone: commissioners’ staffs, senators’ aides, FCC
bureaucrats and White House appointees. "Not that we know
of," was the almost-universal, perhaps scripted, response.
But one Clinton administration official seated at an ornate
conference table in Vice President Al Gore’s formal office
dropped a dramatic clue, "Of course, in the next 18 months,
there will be tremendous political pressure to let a Bell into
long distance."

"That’s funny, I don’t remember ‘political pressure’
being one of the 14 points on that famous checklist," I
thought to myself.

I almost forgot about the "political pressure"
remark as we journeyed past Washington’s grand edifices en route
to other meetings. A strange mix of disappointment and relief
settled upon our group. The source of our scoop was wrong, but we
mopped sweat from our collective brow in thinking that the
largest of the 800-pound gorillas (how come they’re still called
"Baby Bells"?) was not going to squish us like ants
just yet. We stopped asking about the rumor–it wouldn’t happen
for "18 months," right? It wasn’t until our last
meeting of the day that an FCC commissioner told us the truth
with a question, "You are aware, aren’t you, of the
closed-door meetings going on at the Common Carrier Bureau to
negotiate a deal for Bell Atlantic/NYNEX to get into New York
long distance?"

Yikes! "It’s true!" we gasped. Here was an FCC
commissioner spilling the same beans that others in the agency,
who also knew the truth, were disavowing. "I’m appalled at
what’s going on," the commissioner exclaimed. So were we.
Policy makers "in-the-know" looked straight into our
eyes and told us it wasn’t happening. Later, the tiger was let
out of the bag by the Washington Post only to be confirmed to me
personally by Bell Atlantic’s CEO, Ray Smith: His company would
be providing interLATA services in New York by year’s end,
guaranteed.

Make no mistake, ACTA’s members look forward to the day when
they can compete fairly with the local monopolies. ACTA’s members
relish the chance to beat the Bells in the competitive arena
because they know that the monopolies can’t compete. By
definition, the regional Bell operating companies (RBOCs) are not
capitalists; they are monopolists. To wear the proud badge of a
capitalist one must put one’s capital at risk. The Bell
monopolies have enjoyed a risk-free government-guaranteed rate of
return on their capital for more than a century. On a fair field
of battle, the agile and creative entrepreneur will win every
time. But the battlefield is sloped against the competitive
community. As long as the local monopolies still control the
bottlenecks and expand their blubberous masses by gorging on
inflated access charges, they will be able to wage war against
competition well into the next millennium.

According to consumer advocates, Bell Atlantic/NYNEX still has
nearly 99 percent of the facilities-based local services market
share in its region. The operations support systems (OSS) it
provides to CLECs are nowhere near on par with what it provides
to itself. It continues to drag its feet with provisioning of
CLEC orders and erects roadblocks that slow or prevent
interconnection and collocation. But these are all facts that
will be brought to light when Bell Atlantic/NYNEX finally files
its Section 271 application. The fact that this RBOC’s behavior
does not satisfy the 14-point checklist does not matter.
"Political pressure" will ensure its entry into New
York no matter what.

What did that White House staffer mean by "political
pressure" anyway? After thinking about where I was when I
heard that remark (Al Gore’s office) it dawned on me. The 2000
presidential race is already upon us. The self-proclaimed
"father" of the Telecommunications Act of 1996, the
vice president, may think his legislative offspring might look
like a failure unless there is "more competition in long
distance." So, the mantra in Gore’s office must be,
"Don’t confuse me with the facts." He must have
forgotten that anywhere from 500 to 800 long distance carriers
are unleashing a creative brilliance seldom seen in our laissez
faire system. His staff must not know that entrepreneurial IXCs
are driving up quality and driving down long distance prices
while local rates rise. At the same time, IXCs are busy
subsidizing the Bells as well. Can you think of any other
capitalist endeavor in which entrepreneurs are required by law to
subsidize their monopolist competitors? The White House also must
not realize that the RBOCs can get into out-of-region long
distance anytime they want to (we’re still waiting to catch that
big wave) but haven’t, to any significant degree, because it’s a
whole lot easier to use their coercive market power for such
endeavors in-region. And Vice President Gore probably hasn’t
stopped to think that the FCC is woefully ill-prepared to enforce
the law once an RBOC is allowed into in-region long distance.

I learned a lot on that wet February day. It’s true what the
cynics say: Truth and logic really don’t count in Washington.
"Political pressure" and political contributions do.

Robert McDowell is deputy general counsel to ACTA and is
an attorney with Helein & Associates, P.C. in suburban
Washington, D.C. He can be reached at (703) 714-1311.