SOAP BOX: Rural Rollout of Advanced Services Requires Realistic Grasp of Digital Divide

Posted: 07/2002

Is The Battle Over?

By Walter G. Blackwell

Feb.
7, 1996, the date the Telecommunications Act was signed into law seems like such
a long time ago. And in many ways it is. Look around your company and ponder the
changes that have occurred during the past six-plus years. And as you look
beyond your company, out towards our industry as a whole, the changes probably
are more striking. We’ve experienced one of the greatest economic boom times in
recent memory and the most severe economic downturn our industry has ever seen.
Mergers, acquisitions, bankruptcies; we’ve experienced them all. And the
seemingly endless uncertainty in the regulatory environment can cause one’s head
to spin. What are telecommunications service providers, particularly the small
to mid-sized providers, many of whom mortgaged their personal assets to follow
the promise of the ’96 Act, to do?

That promise was for full and
unfettered competition in the local markets and subsequent entry by the RBOCs
into the interLATA long-distance market. The cornerstone of the Act for ensuring
the realization of this promise is the "271" process, whereby the
incumbents were given a guide, known as the 14-point checklist, to follow in
order to demonstrate they had opened their markets to local competition. This
checklist spells out how the RBOCs are to share their networks and open their
monopoly markets to competition. And if they follow the checklist they will be
allowed into the interLATA long-distance market. Seems simple enough. And to
some extent it was.

Bell Atlantic (now Verizon
Communications Inc. won the first approval, in December 1999 in New York. Since
then, the FCC has approved long-distance entry in 13 states, with approvals
expected in late June for Maine and New Jersey. The most recent approvals were
in Georgia and Louisiana. (The latter was received after BellSouth Corp.’s third
attempt to do so.) Furthermore, state regulators in South Carolina and Kentucky
already have endorsed BellSouth’s application, so the FCC should be receiving
the applications soon, and there is no reason to believe these too won’t be
approved.

The 271 debate continues, six years
after passage of the Act, as the remaining states undertake or complete their
proceedings and determine whether or not the RBOCs have met the checklist
requirements. Undoubtedly, thousands upon thousands of documents will be
produced on both sides of the debate. But at some point one must ask, "at
what cost?" The competitive industry has spent millions of dollars in state
and federal proceedings to persuade regulators the RBOCs had not opened their
markets to local competition and, therefore, were not legally eligible to enter
the interLATA long-distance market. Arguments that were and are justified, but
at what cost and how effective have we been? Without doubt, we were effective in
demonstrating the early 271 submissions were, at the very least, premature. Did
anyone really believe the local markets in Michigan or South Carolina truly were
open to competition and Ameritech & BellSouth had met the 14-point checklist
back in early 1997? Apparently Ameritech and BellSouth believed they had, but
fortunately the regulators found otherwise, based in no small part on our
evidence to the contrary.

The effectiveness of the competitive
industry’s efforts were evident in the withdrawal and denial of a number of 271
applications, including Louisiana which had been denied twice and withdrawn once
before it was approved in May. Some may continue to argue the final approval
itself was premature but ultimately we must accept the outcome and learn to do
business in the post-271 environment.

This in no way implies we should
abandon our efforts to ensure compliance with the 14-point checklist. To the
contrary, we must remain vigilant in providing the necessary data to justify a
delay or denial of an application. Regulators cannot make reasoned and informed
decisions in a vacuum or by hearing from only one side.

However, at this point, after more
than six years and a following a string of approvals, perhaps now is the time
for the industry to pay more attention to learning how to compete effectively in
the rapidly evolving post-271 landscape and forge partnerships with the RBOCs.

Perhaps now is the time to consider
alternatives to regulatory debates and proceedings in order to chart our
competitive destiny. Even the fiercest competitors can find common ground when
they believe their individual interests can be served. Is there common ground,
tilled and harvested between the behemoth monopolists and the agile new entrant?
I believe so. But it won’t be discovered unless and until each side sits down in
a business forum, not a legal setting, and discuss the options, face-to-face.
Now many cynics in the crowd will roll their eyes and bemoan a history of broken
promises and anticompetitive behavior, and all that may very well be true. But
is it worth the effort? Even though our continued efforts may be successful in
delaying approvals, it is inevitable that the RBOCs will receive approval in all
states. Therefore, we should be looking to do business and partnering with them.

The regulators role is not to
determine who wins or loses. They have broader public policy considerations.
Ultimately, it is good business practices and shrewd negotiating skills that
will separate the winners from the losers. It is incumbent upon ASCENT, as a
trade association, to assist its members in gaining the skills needed to emerge
as winners on what may very well be an unfair regulatory playing field. However,
we must and will remain vigilant in our regulatory oversight and involvement,
but it will not be at the exclusion of other strategies to succeed in the
marketplace.

For those who can’t wean themselves
completely from regulatory skirmishes, rest assured plenty of battles lay ahead,
but I suggest they be a bit more judicious in the battles chosen. In fact, the
FCC is reviewing important regulatory issues. Probably the most critical is the
"Triennial Review" with the future availability of local switching,
and therefore UNE-P hanging in the balance. Post-271 compliance issues also are
being addressed and will continue to be in the future.

As the regulatory landscape changes
so does the competitive landscape. Are the small to mid-sized service providers
equipped to handle both and still succeed? The answer is they can be, and that’s
where ASCENT steps in. The entrepreneurial spirit of our members leads me to
believe they will find a way to stay in business regardless of the changes. It
is up to ASCENT, as an industry trade association to help them "Start, Stay
& Succeed" in their business pursuits. With ASCENT’s renewed focus on
business and industry education, networking and yes, regulatory and legislative
affairs, we intend on doing just that.

Walter G. Blackwell is president
of the Association of Communications Enterprises. He can be reached at wblackwell@ascent.org.