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BARTON’S RESALE STRATEGY MAY HAVE BACKFIRED

WASHINGTON-Rep. Joe Barton, R-Texas, having failed to win support for switched wireless resale at an oversight hearing he chaired earlier this month, might pursue the issue as a member of the House-Senate conference committee on telecommunications reform.

“We’re not ruling it out; we’re considering it,” said Craig Murphy, press secretary for Barton.

Conferees charged with reconciling House and Senate telecommunications reform bills were picked just more than a week ago. (See story on Page 4). Staff work has begun on the conference, but it is unclear when lawmakers will begin formal negotiations on the landmark measure to overhaul the Communications Act of 1934.

Clouding the issue is the debate at the Federal Communications Commission over wireless resale policy, despite general agreement that switched resale should not be imposed on the industry.

Barton offered a switched wireless resale amendment during subcommittee and full committee markups of the House telecommunications reform bill in May, but withdrew it each time at the request of Commerce Committee Chairman Thomas Bliley, R- Va., and Telecommunications Subcommittee Chairman Jack Fields, R-Texas, when it appeared the proposal lacked votes and would turn into an embarrassing setback for Republicans.

Rather than trying to win approval for his amendment when the telecommunications reform bill reached the House floor in August, Barton decided to press the resale issue as head of the Commerce subcommittee on oversight and investigations. But his strategy may have backfired.

Government officials, academics and lawmakers-Republican and Democrat alike-tended to favor competition over regulation at the Oct. 12 hearing, but differences of opinion were voiced about when that competition will arrive and how strong it will be.

Barton doubts whether price competition exists in the cellular telephone industry and is skeptical whether new personal communications services will help because of indications that all wireless telephone licenses eventually will be held by only a handful of companies.

Allowing resellers to install their own switches or to interconnect with switches of mobile telephone networks would increase competition now, according to Barton.

“In searching for ways to make competitive the long distance and the wireline local exchange market, this bill ignored the fastest-growing and perhaps the most important sector of the telecommunications market: wireless,” said Barton of the telecommunications reform legislation.

Today, 30 million subscribers are served by the two cellular carriers in each market. The industry said service prices dropped 36 percent during the past decade, or roughly since the technology’s commercialization. Resellers reply that service rates for small users have gone up in recent years.

There are about 100 cellular resellers. Most are small firms, with the notable exception of MCI Communications Corp. as a result of its $190 million purchase of the largest reseller, Nationwide Cellular Service Inc.

While the FCC, Justice Department and General Accounting Office said the cellular telephone industry is not fully competitive, officials from those agencies who testified largely discouraged mandated switched wireless resale or unbundled interconnection in light of coming competition from PCS.

Anne Bingaman, chief of the Justice Department’s antitrust division, said the Clinton administration has not formulated a formal position on whether the promise of competition obviates the need for added regulation.

“The resellers are asking government for a special regulatory deal,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.

Wheeler said the reseller proposal undermines firms that have invested nearly $8 billion on spectrum and $30 billion on wireless infrastructure in keeping with the deregulatory, competitive framework established by Congress in 1993.

Resellers argue that contrary to a special deal, they are seeking open access networks like those allowed in long distance and local exchange markets.

“In cellular, all we have are switchless resellers and they buy service at ridiculously high wholesale rates from facilities-based carriers. It makes it very difficult for them to provide competitive and innovative services to customers,” said David Gusky, president of the National Wireless Resellers Association.

Wheeler countered that MCI gets resale discounts of up to 40 percent and that Time Warner Inc. nabs one of every three new cellular customers in Rochester, N.Y., through its resale business.

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