Should Baby Bells be rewarded for anticompetitive behavior?
I have commented on several occasions in this column that I oppose the Tauzin-Dingell bill. The bill proposes to roll back several provisions in the 1996 Telecommunications Act, enabling Incumbent Local Exchange Carriers (ILECs, or Baby Bells) to more easily offer long distance data services in their areas, among other things. My opposition is mainly based on my belief that it will be bad for consumers because it will strengthen the Baby Bells’ stranglehold on local competition. As the bill nears a vote on the House floor, I wanted to use this space to elaborate.
As I said, my arguments are based on projections of what will happen to consumer choice when the anticompetitive behavior of the Baby Bells is legalized by the bill. These projections are disputed by the bill’s supporters, who claim the Baby Bells will give consumers better services at lower prices even though consumer choice is greatly diminished. As a customer of Qwest, I have a hard time believing in the good faith of the Baby Bells. But I see no way of winning an argument about what lies ahead.
So I will turn my attention to the ILECs’ past actions as an alternative argument. There is another source of opposition that others have expressed, and it cannot be disputed. The Baby Bells have repeatedly broken the law by excluding Competitive Local Exchange Carriers (CLECs) from access to their systems, and they should not be rewarded for doing so. The reason I have not expressed this source of opposition in the past is that it was mostly based on hearsay. CLEC executives we talked to repeatedly told us that they were not granted access to networks as guaranteed by the act.
A story on our site over the weekend goes beyond hearsay to point out the facts of public record in the case of anticompetitive behavior. Baby Bells have paid $1.84 billion in fines related to this and similar illegal behavior since the 1996 Telecom Act was passed. This fact was pointed out by Voices for Choices, a group representing the CLECs in Washington. The Baby Bells have clearly taken a maverick approach to the law since its passage. It is cheaper to pay fines for anticompetitive behavior than it is to succumb to competition. In fact, $1.84 billion is nothing compared to the $851 billion in revenue these companies have logged since 1996.
In my view, it would be irresponsible for Congress to pass a bill that effectively makes this anticompetitive behavior legal. Not only would it remove the fines from the equation, it would reward the ILECs for breaking the law. It would be like passing a law that makes it legal for Microsoft to bundle every desktop application it makes into the next version of Windows after all it has done to use its monopoly to squash competition. And considering the ILECs’ record, who could say with a straight face that they would use this new power to do what is best for consumers?
James Mathewson is editor of ComputerUser magazine and ComputerUser.com.