WASHINGTON-This week’s second anniversary of the 1996 telecom act is being greeted with heightened skepticism by industry, policy makers and the public about whether the promise of competition, lower prices and consumer choice has been lost in the morass of consolidation and litigation that has ensued for the past two years with the blessing of the Justice Department.
“It’s an abysmal failure at this juncture,” said Gene Kimmelman of Consumer Union.
Others disagree, saying it is too early to see benefits of a law designed to overhaul a century-old monopoly known as the Bell System.
While Congress has not been shy about venting frustration about Baby Bell mergers and the absence of local competition in the two years since the act was enacted, lawmakers are reluctant to do anything about it. Their fear: the sky will fall if the telecom act is reopened.
There is one notable exception: John McCain (R-Ariz.), a maverick who heads the Senate Commerce Committee. McCain voted against the 1996 telecom act and is undaunted about the risks of tinkering with a law he believes is too regulatory and anti-competitive.
The problem is, like with digital TV auctions, campaign finance reform and other contentious issues, McCain is largely out there by himself.
The Arizona lawmaker plans to hold hearings on universal service, antenna siting, E911 and other issues this year to lay the foundation for an attempted rewrite.
With the midterm election right around the corner, anything is possible if the issue catches fire with voters, which could force Congress off the fence.
“This is a critical year for folks at the FCC and on Capitol Hill,” said Mark Golden, senior vice president of industry affairs for the Personal Communications Industry Association. “Will they go into the second round and get the job done or just throw their hands up and walk away?”
Indeed, controversy over the interconnection provisions of the 1996 act has percolated all the way up to the U.S. Supreme Court, but it could be another year until the high court takes up the issue.
“I am very pleased the Supreme Court has decided to hear this case,” said Bill Kennard, chairman of the Federal Communications Commission. The American people will reap the benefits of competition much sooner if the Supreme Court upholds the interpretation of the Telecommunications Act urged by the FCC.
Some believe it will be too late by then; mega mergers will have changed the telecom landscape.
In the meantime, legal and regulatory uncertainty abounds: anathemas to Wall Street.
But even while the wireless industry is not embroiled in the interconnection debate as a result of the wireless-wireline interconnection carve-out that the FCC reiterated late last year, problems persist.
Metrocall Inc., a major paging carrier, has complained to the FCC that several regional Bell telephone companies and independent telephone companies are thumbing their noses at wireline-wireless interconnection rules.
“There’s progress, but [interconnection] rates are not coming as much as wireless carriers would like to see. It’s not home yet,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.
Taking a broad view of the situation, Wheeler said the Communications Act of 1934 was fine-tuned during 60 years of legislation, regulation and litigation. “We’re living through stages,” said Wheeler, referring to continuing squabbles over the telecom act at the FCC, on Capitol Hill and in the courts.
While Congress put the wireless industry on the road to deregulation and competition in 1993, major provisions contained in the landmark 1996 law are threatening to undermine the policy objectives of the 1993 legislation.
Expanding the universal service program to include Internet wiring to schools, libraries and rural-health facilities is raising wireless bills.
The “hidden tax,” as Wheeler calls it, is just one of a myriad of levies hitting wireless carriers at the federal, state and local levels.
Wireless carriers have to pay into the universal service pool with little hope of drawing on the billions of dollars meant to subsidize poor and high-cost subscribers.
“So much money is at stake, this needs to be handled in a more sane, coherent way,” said PCIA’s Golden.
Lax enforcement of interconnection rules, lack of federal leadership on taxation and antenna siting moratoria and ill-conceived reporting requirements, according to industry leaders, could stifle wireless competition and prevent wireless carriers from challenging the Baby Bells, GTE Corp. and the independent carriers for a share of the $100 billion local market.
The dispatch-radio industry has taken hits from the telecom act, indirectly and directly.
Alan Shark, president of the American Mobile Telecommunications Association, said telecom act implementation deadlines required the attention of many of the FCC’s skilled personnel. As a result, according to Shark, dispatch issues were either delayed or ignored since the Feb. 8, 1996, enactment of the new law.
“We were dealt a blow through inattention,” said Shark.
Moreover, Shark said some dispatch operators are surrendering interconnection so they can shed commercial mobile radio status, which carries with it universal service requirements and a myriad of common carrier obligations.
But by doing so, Shark says dispatch operators are contributing to their own demise.
“We’re subsidizing the large entities that can take advantage of it (universal service subsidies),” Shark stated.
