Hundt misses the mark

Treat cable phone providers the same as ILECs. 5/4 ReleVents hed: Hunt misses the mark dek: Treat cable phone providers the same as ILECs. By James Mathewson

To say that the telecom landscape is in a state of turmoil is an understatement. First, we have the 1996 Telecom Act, which tried to introduce competition to the marketplace. Add unprecedented mergers and acquisitions, new wireless carriers vying for spectrum, and upstart Voice over Internet (VOIP) providers over cable, and the whole thing becomes too complex to get our minds around.

This complexity is reflected in the present state of legislative telecom efforts. As a news story on our site describes. On the right, we have Billy Tauzin and his cronies urging a repeal of vital aspects of the ’96 act. These guys want to help out the Incumbent Local Exchange Carriers (ILECs) and don’t give a damn about competition. On the left, James Sensenbrenner and his pals are trying to rein in Tauzin’s efforts for the sake of competition.

Amidst the confusion that defines the present legislative climate, former Federal Communication Commission Chairman Reed Hundt offered moderate words of wisdom. His view is that, under the present infrastructure, we will never have telecommunications competition. The theory is, true competition requires two sets of lines to each business or home, not just two sets of equipment at the switching station. And the only way to achieve this is to wait for the cable companies to get up to speed on VOIP technology. Until then, tweaking the ’96 Telecom Act is foolish. You can spend a whole summer debating the issue and by the time the bill becomes law, the cable companies will have more of the telecommunications business than all the Competitive Local Exchange Carriers (CLECs) combined. And most of the legislators’ work will be moot.

While I am the biggest advocate for the CLECs on the planet, I see Hundt’s point. It will never be economical for competition over the same set of lines. But when broadband cable becomes ubiquitous, we will have the kind of competition that proponents of the ’96 act had hoped for.

I would like to offer one disagreement with Hundt, however. Unless the act is amended in some ways, when the cable companies do get over the technological hump, they will have a huge advantage over CLECs and ILECs. The reason is, cable companies are not regulated the same way as ILECs. The act treats them as a different kind of entity altogether, in part because the very idea of VOIP over cable wasn’t even on the horizon when the act was signed into law.

There is one salient way cable’s special regulatory status affects the telecom landscape: Cable providers are free to offer long distance service while serving as a local monopoly on cable service. Because of this, if the act is not changed to treat cable companies the same way as phone companies, I look for Time Warner Cable, AT&T, and the like to own most local phone business in 10 years. If CLECs can’t compete now, they certainly can’t compete against the advantaged cable companies.

So change the act now, but not the way Tauzin and friends want it to be changed. Set up the regulatory system so that all phone signals are treated as equals, whether analog or digital, whether delivered over the Internet or more traditionally.

James Mathewson is editorial director of ComputerUser magazine and ComputerUser.com.

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