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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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Posted on 01/16/2003 8:35:01 PM PST by HAL9000
Federal Communications Commission Chairman Michael Powell told the Senate Commerce Committee on Monday that "we are at critical crossroads in communications," spurred by computerization.
Who could disagree with that? And who could disagree with the five goals set out by the son of Secretary of State Colin Powell for a more vibrant telecom tomorrow:
- "Bring consumers the benefits of investment and innovation in new communications technologies and services.
- "Expand the diversity, variety and dynamism of communication, information and entertainment.
- "Empower consumers, by moving toward greater personalization of communications - when, where, what and how they want it.
- "Promote universal deployment of new services to all Americans.
- "Contribute to economic growth, by encouraging investment that will create jobs, increase productivity and allow the United States to compete in tomorrow's global market."
Great stuff. But how do you get there?
Sen. Bill Nelson, D-Fla., provided the answer. In one of the shortest statements ever issued by a U.S. senator on record, Nelson offered this wisdom: "Competition and the input of state regulators. That's what I'd underscore."
The worry of many senators expressed at the hearing on telecom's future on Monday is that the FCC, while giving lip service to competition, may soon undermine it, particularly local telephone competition.
One of the key rules the FCC will decide in the next six weeks involves the ability of competitive exchange carriers to the local Bell operating monopolies to lease from them their networks at wholesale rates. After years of litigation and hearings, state utility commissions, frustrated by a lack of competition, have begun to approve wholesale leasing. The so-called UNE-P (for "unbundled network element platform") has in two years doubled the level of competition in local phone markets that had occurred after the first five years of the telecommunications act of 1996.
But the level is still hardly Earth shattering - a mere 11 percent, about 21 million lines out of the 190 million that the Bells control, as Powell testified.
But what Powell had to say about UNE-P could hardly be reassuring to those interested in competition.
Powell cast the commission's decision-making on UNE-P as being forced upon it by the courts, because the courts ruled the FCC hadn't met a Congressional mandate to require only unbundling of those elements of the local Bell networks necessary for a competitor to gain entry into the market.
Powell has interpreted the court's ruling to mean that the "commission must establish, from the ground up, the clear impairment of each and every element that it orders unbundled. ? If even one of those elements cannot be sustained under the more rigorous impairment analysis, the UNE-P will not be government mandated as an alternative."
It sounds almost like an impossible task, as Powell describes. After all, cable companies that now supply phone service to 2.6 million lines don't need many, if any, of the Bells' network elements to go into business, so how can impairment be demonstrated on any element on a one to one basis? And one error and the whole UNE-P structure falls.
But it isn't quite that hard. As Robert Bork, former solicitor general and an antitrust expert, explained in a letter on behalf of AT&T to the FCC last Friday, the federal appeals court in remanding the UNE-P rule back to the commission didn't require that it prove it impossible for entry for just one competitor, that would create a duopoly, but of multiple competitors. "The commission's basic task in implementing the 'impairment' standard is to assess whether entry barriers exist for each particular network element that would prevent multiple firms from deploying alternative facilities," Bork wrote.
Entry barriers keeping multiple firms out of a market as opposed to just one - such as a cable company - mean that most of the elements the Bells are required to rent under UNE-P are necessary for entry of a competitor, at least at the start.
And by relying on state public utility commissions to make the determination of when sufficient competition exists to eliminate elements from the UNE-P list, the commission could more readily meet both Congress' desire to promote competition nationally and court mandates to determine on a market-by-market basis when competitive factors were such that the Bells could be released from unbundling obligations.
There is some hope that that is exactly what the FCC will do.
Commissioner Michael J. Copps, a Democratic holdover, said something that would make most Republicans proud. He told senators, "The commission and the state (regulatory) commissions have a joint responsibility under the (Telecom) Act (of 1996) to ensure that conditions are right for competition to flourish. The path to success is not through preemption of the role of the states.
"We rely on state commissions for their efforts to open local markets to competition. We rely on state commissions to evaluate the openness of local market in applications for long-distance authorization. ? Similarly state commission are often best positioned to make the granular, fact intensive determinations about any impairment faced by competitors in their local markets. The importance of federal-state cooperation cannot be overstated. It would be worse than unfortunate if our decisions in the upcoming proceedings led to less cooperation with our state partners."
And Copps was joined in those sentiments by Bush appointee Kevin J. Martin.
"I believe it is essential to continue to encourage local competition. By maintaining the ability of new entrants to access elements of the incumbent network that are essential for competitive services, consumers can receive the benefits of competition," Martin said.
And he added, in words similar to Copps, that "assessments of whether access to an element is necessary to provide service may vary significantly among different markets, states and regions. State commissions have worked well with the commission in implementing the requirements of the a1996 Act. A more granular review could allow for state cooperation and input, especially regarding highly fact intensive local determinations."
Considering the outcry by state utility regulators about curtailing UNE-P at this time, cooperation with them would involve not dismantling the UNE-P structure but providing the appropriate legal justification to the courts for its continuation in markets where barriers to entry to multiple participants remain high.
At this "critical crossroads" for the competitive future of telecommunications, that is the wisest path to take.
Copyright © 2002 Tech Central Station - www.techcentralstation.com
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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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as usual they miss the story. UNE-Ps are making the bell companies provide service to their competitors below cost. All the while bells are forced by PSCs to provide service to people in rural areas that cost more than they charge. New competitors can cherry-pick the best metro areas to sell their services. So the bells are getting screwed and Powell wants to fix it. This is the story that's not being told.
The Bells' "below cost" story has been told, and the U.S. Supreme Court ruled it was a bunch of crap.
The Court ruled against the Bells. Here is a direct link to the Supreme Court ruling in PDF format. (Verizon Tel Cos. et al v. FCC, 122 S.Ct. 1646 [2002] - Argued October 10, 2001, Decided May 13, 2002):
Here are a few quotes from the decision about the Bell's bogus arguments -
"The comparison, however, is spurious because the numbers assumed by the incumbents are clearly wrong.""On the other side of the comparison, the "balance sheet" number is patently misstated."
"If leased elements were priced according to embedded costs, the incumbents could pass these inefficiencies to competitors in need of their wholesale elements, and to that extent defeat the competitive purpose of forcing efficient choices on all carriers whether incumbents or entrants. The upshot would be higher retail prices consumers would have to pay."
The "quotes" you posted consisted of just a bunch of political opinions not facts. But, of course, this whole thing is political driven. However, the last item gets at the issue and makes my point. The bells network is full of embedded elements. That's the point. Bells are being forced to resell those elements below their costs in order try to foster some unnatural phoney "competition". Steal from the bells to give to the CLECs or some such nonsense. 'Wholesale' = below cost. Powell sees through this crap and is seeking to rectify it.
One could say that all legal decisions are merely "political opinions", but those are direct quotes from the SCOTUS decision ruling that the RBOC methodology uses artificially inflated "costs" to make it economically unfeasible for competitors to access the network. That opinion is shared by antitrust experts like Robert Bork, and economists like James K. Glassman.
Powell sees through this crap and is seeking to rectify it.
You're referring the same Michael Powell who was a featured speaker at the Rainbow-Push conference yesterday? Apparently, his crap detector isn't working too well, whether the source of the BS is Jesse Jackson or an RBOC lobbyist. But perhaps he is beginning to realize finally that his position is untenable, legally and politically.
They aren't 'selling' anything. They lease lines to competitors BTW.
L
That is hogwash. Bells are regulated aren't they? Not sure they can hide anything from the FCC or PSCs. Their cost structure is fairly well known.
The supremes deal with matters of law not necessarily what's fair. They said the 1996 law wasn't specific enough regarding the types of "costs" they were referring to etc and that "cost" is a vague term and not clear whether it refers to going-forward costs or purchased costs. It is blantantly unfair to force any Company to lease below cost. If CLECs want to get into the telephone business they could build their own facilities instead of looking for handouts from the feds and the public so they can cherry-pick lucrative customers. The bells ought to tell them to take a hike. They won't because they're afraid of the feds and the PSCs. This is classic case of over-regulation by the government.
I know just enough about the telecom business to know that if we hire a hundred accountants to tell us what it "costs" to provide any given service, we will get 100 different answers, they will vary widely, and every one of them will be totally defensible and will make sense. So when one guy says "It's below cost" and the other says "No it's not," I know we have a decision that is going to be made politically, because there is no right answer to what it "costs." |
I see numerous instances of words like "fair", "unfair", "fairly", etc. in the SCOTUS decision. It appears they dealt with issues of fairness in their decision.
They said the 1996 law wasn't specific enough regarding the types of "costs" they were referring to etc and that "cost" is a vague term and not clear whether it refers to going-forward costs or purchased costs.
The 1996 law ordered the FCC to set the rules for determinings costs. They came up with TELRIC (total element long-run incremental cost). The RBOCs challenged TELRIC in the courts and lost.
It is blantantly unfair to force any Company to lease below cost.
I agree with you on that. The question is how to determine "cost". SCOTUS said the RBOC cost claims were bogus.
If CLECs want to get into the telephone business they could build their own facilities instead of looking for handouts from the feds and the public so they can cherry-pick lucrative customers.
The CLECs will make a transition to their own facilities, at least as far as the switch. It will be a gradual process, giving them a chance to establish a customer base. That is the way competition in long distance developed too, and it has been mostly successful. But it is not prudent or necessary to overbuild the last mile and wholesale access must be available to the last-mile for the foreseeable future.
The bells ought to tell them to take a hike.
If they want to do that, they can give up their common carrier status. Then they can decide who to serve and who not to serve on a whim. But I doubt they would take that deal.
They won't because they're afraid of the feds and the PSCs. This is classic case of over-regulation by the government.
What Powell is proposing is a federal power-grab that would remove state PSC authority and shift the regulatory power to the FCC. That would be an improvement?
And who was running the FCC then? huh? A Clinton butt-boy. Let's hope Michael Powell can help at least water down this telecommunications class warfare doctrine a tad.
SCOTUS said the RBOC cost claims were bogus.
Bogus? Just because they did not see to interfere and support bells against FCC doesn't necessarily mean they thought bells cost claims were bogus. The Supremes also supported abortion too but that doesn't make it right.
What Powell is proposing is a federal power-grab that would remove state PSC authority and shift the regulatory power to the FCC. That would be an improvement?
I don't agree with your characterization. But first of all, the wonderful PSCs are typically democrat politicians who haven't a clue what they're doing. They operate on the political plane and aren't interested in fairness. The FCC stepping in is good or bad depending on who is in there. With a Republican appointee now is the time to try and fix leftover class warfare policies of the Clinton crowd. I also fail to see how the FCC stepping in and changing the formula so bells are not required to lease below their costs is anything but cleaning up the previous FCC's mess.
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This is one of those issues where a person would have to do two years' worth of reading before they could feel confident that they can tell who is BS-ing who here.