YOU ARE AT:Archived ArticlesD.C. NOTES: LOCAL COMPETITION IS DEAD

D.C. NOTES: LOCAL COMPETITION IS DEAD

Some truths are not self evident, but every once in a while, the dawn’s early light shines through. Truth has no place in this city of self-serving factoids, where winning and whining make moral relativism king.

Here, they are engaged in a folly of a debate over the 1996 telecom act implementation. Heated words are exchanged over local competition, long-distance entry, mega mergers and so on.

The truth of the matter is it’s over. There will not be local competition, certainly nothing like what starry-eyed telecom executives and policy makers promised the American people.

You know who showed me the light? SBC CEO Ed Whitacre Jr., of all people. After testifying May 18 before a Senate Judiciary antitrust subcommittee on why the proposed $62 billion SBC-Ameritech merger is good for domestic and global competition, Whitacre spoke candidly with reporters.

He said SBC-Ameritech local service would gravitate to satellite offices of large corporations. What about choice for residents in major markets? Hmm. And rural folks? Forget it; they cost too much to serve, we were told.

Even in the face of broken promises and such blatant cream-skimming plans by Whitacre, AT&T Corp.’s Armstrong and others, official Washington seems to lack the courage to admit local competition is dead for you and me.

Then again, to admit as much would be to admit the telecom act has failed. It has, and it’s beyond fixing because of fierce commercial forces beyond Washington’s control.

The seven Baby Bells, with their ironclad grip on local markets, and the Big Three, with their domination of long distance, are spending hundreds of millions of dollars-probably billions-feigning a fight over getting into each other’s business. It’s a huge hoax.

Neither side wants competition; the cost of losing market share to one another is too high.

Short of forcing Baby Bells to surrender control of local bottlenecks, a constitutionally suspect proposition requiring property confiscation, there is no way to make local networks open to local competition. The Bells are in control.

There may be a way out of this. It would require a major-albeit simple-regulatory shift. Flip flop the current competition policy, which is based on an unworkable wireline model and treats wireless as an afterthought.

Instead, think wireless first, wireline second. Alternative technology platforms are the future.

Next, forebear from enforcing every possible common carrier regulation (resale excluded) against wireless carriers. Hold your nose and cut financial slack for struggling wireless upstarts.

And then get the hell out of the way.

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