MULTIPLE DWELLING ACCESS CALLED IMPEDIMENT TO COMPETITION
Nondiscriminatory access to multitenant dwellings by communications service providers was viewed as commonly shared impediment to competition Wed. at Senate Judiciary Antitrust Subcommittee hearing. Although witnesses offered divergent perspectives on extent of competition stemming from 1996 Telecom Act, incumbent, competitive and interexchange carriers all chimed in that restrictive landlord policies had stymied their market expansion efforts.
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Sen. Kohl (D-Wis.) said “Congress can’t mandate competition, and if competition doesn’t make business sense, laws like the Telecom Act won’t really work.” However, he raised question whether “fine-tuning the Act” to address issue of building access could remove significant stumbling block to competition. “If the owner of a big apartment or office building has a sweetheart deal with the phone company, then building residents are often prohibited from shopping around for a different phone company,” he said. “As a result, the telecom competitors are denied access to a large, important pool of potential customers, and people are locked into expensive service because the building owner has a special deal.”
AT&T Pres. David Dorman said nationwide building access legislation not only would open additional avenue to competition, but also would help avoid burdensome compliance with “crazy quilt of state regulations” Bill addressing that area “would be attractive to national competitors,” he said.
Time Warner Telecom Pres. Larissa Herda said company “always has to spar with landlords.” Legislative mandate to provide nondiscriminatory access would have to be backed up by threat of tough penalties to dissuade potential violators, she said. “Last October, the FCC adopted an order that prohibits exclusive contracts between carriers and building owners,” she said. “This order sent an extremely important message to building owners. However, the order fell short because the FCC did not take the next step of imposing penalties on building owners that deny or delay access to their buildings.”
Tex. PUC Chmn. Patrick Wood said his state in 1995 sought to address problems with carrier access to “the last foot” by passing building access law that thus far had encountered few glitches. “And in 2000, the Texas Commission adopted specific procedural guidelines that should be observed and set out a Commission process to be used if negotiations between building owners and providers failed,” he said. “To date, the Commission has not been asked to formally adjudicate such a dispute.”
SBC Gen. Counsel James Ellis said incumbent carriers also faced such problems with landlords and emphasized company’s billion-dollar investments “in developing systems and processes to make it possible for competitors to enter and compete in local markets,” consequence of Sec. 271 requirement that ILECs open local market before receiving authorization to provide in-region interLATA service. He also reiterated ILEC industry call for “asymmetrical regulation… No incumbent is going to invest in DSL in a market where they have burdensome regulation and our direct competitor is free from regulation.”
On Act’s overall impact on competition, Subcommittee Chmn. DeWine (R-O.) said incumbent providers had “made some progress” in opening markets, evidenced by Bell company entry into in-region interLATA voice markets and cable TV industry into local phone service markets. “At the same time, however, there are many reasons for concern,” he said. “[ILECs] still have over 93% of the overall local market, and the competitive local exchange carrier market is even worse -- the [CLECs] have only 3.2% of the residential market… It is hard to argue that a 3% market share is an acceptable outcome” since passage of Act 5 years ago, he said.
Former FCC Chmn. Reed Hundt, senior adviser at McKinsey & Co., said that no Congress across globe ever had passed law as complex as 1996 Act. However, since its passage, consumers have doubled what they spend on communications because of dip in prices and “flourishing choices… We did the right thing in 1996, and we have to stick with it.” He said most important measure for FCC was to make local loop available at forward-looking prices: “Forward pricing is critical to the success of the competitive model.”
Cox Communications CEO James Robbins recommended that Congress and FCC focus on facilities-based competitive model, rather than resale and unbundled network element (UNE) models. “The stark reality is that it is difficult to implement a business model that relies heavily on purchasing essential inputs from you fiercest competitor, who also happens to be a long-standing monopolist,” he said. “A far more reliable approach is to make capital investments in your own infrastructure and decrease reliance on ILECs as much as possible.”