Reflecting on Telecom Act progress after 5 years, FCC Comr. Ness said Thurs. she hoped Commission would “hold firm in our view” that it’s only after Bell companies have met statutory requirements such as cost-based pricing that they are allowed to enter long distance. She spoke to reporters at press breakfast one day after AT&T Chmn. Michael Armstrong suggested in National Press Club speech that long distance carriers were having so much trouble breaking into local markets it might not be worth effort (CD Feb 8 p7). He raised concerns such as inability to lease unbundled network elements at reasonable prices. Chmn. Powell this week also told reporters he didn’t think “deregulation is like the dessert” served only as reward for creation of competition. Asked about Armstrong warning that AT&T might exit markets where it offers local service, Ness said his frustration appeared to stem from pricing regime set on state-by-state basis. “I do think we need to look at some pricing issues, particularly together with our colleagues in the states,” Ness said, noting issue had emerged in conjunction with Bell long distance applications in Mass. and Okla. “We need to have prices that are forward-looking, that are consistent with the requirements of the Act,” Ness said. “We ought to be looking together with the states on what the best practices are.” She said “sustainable” competition has to be based on both cost-based measurements and efficient applications. Asked whether she expected Powell-led FCC to take less activist turn, Ness disputed “notion that all issues here are decided on partisan grounds.” Telecom issues historically are framed along lines of arguments that are more sympathetic to incumbents “versus those more sympathetic to the arguments of the insurgents,” she said. In other policy areas, Ness said she anticipated Commission would move forward on reciprocal compensation and related intercarrier compensation issues shortly. “I am hoping that we will address both of those pieces in the next few weeks,” she said. On wireless spectrum cap, which FCC is re-examining, Ness said it was time to assess purpose of cap. She said she also hoped that service providers with wireless licenses would “do everything in their powers to use spectrum more efficiently.”
Verizon shouldn’t be allowed to enter Mass. long distance market because Mass. Dept. of Telecom & Energy (MDTE) hasn’t set permanent rates for unbundled network elements (UNEs) based on forward-looking TELRIC (total element long-run incremental cost) methodology, Mass. Attorney Gen. said in comments to FCC Feb. 6. Filing said rates didn’t meet one of Telecom Act’s checklist requirements. It also said that until MDTE can review Verizon’s performance assurance plan (PAP), filed Jan. 30, there was no proof that Verizon wasn’t discriminating against its data competitors in favor of its separate affiliate. Attorney Gen. said Verizon’s PAP didn’t include enough DSL performance measures to assure compliance with Act. Filing said DSL competition in Mass. was dwindling, making need to monitor and remedy poor DSL performance greater to ensure consumers have choices.
Unless policymakers crack down on Bell companies, AT&T may have to leave markets where it now offers local phone service and not enter new ones, AT&T Chmn. Michael Armstrong said Wed. in speech at National Press Club. On eve of Telecom Act’s 5th anniversary, Armstrong said AT&T, Sprint and other competitors have had so much difficulty breaking into local markets that it might not make sense to keep trying. Biggest problem is inability to lease unbundled network elements (UNEs) at reasonable prices, he said: “We cannot continue to lose money to force competition. If competing doesn’t make business sense, it’s not going to happen.” Armstrong told reporters after speech that AT&T would “no longer go into markets and lose big sums just to show we're competing.” If nothing changes, “we will be forced to shut down our local service business in N.Y. and Tex.,” he said.
This year’s Commerce Committee communications picture became clearer Wed. in both houses of Congress. Senate Communications Subcommittee Chmn. Burns unveiled his technology agenda with emphasis on wireless and Internet issues. Counterpart House panel, whose Chmn. Tauzin (R-La.) has been explicit about his agenda for some time, finally passed its organizing resolutions appointing subcommittee members.
As Telecom Act hits 5th anniversary, “the glass is half full,” CompTel Pres. Russell Frisby said Wed. at press briefing. Frisby said if they were graded, Bells would earn “F” for not complying with law and opening their markets to competition. Bells opened their markets enough to merit Sec. 271 approval in only 4 states, he said. “That is shameful.” CompTel said this is critical year as Bells seek legislation to ease Sec. 271 rules for data services. Group urged FCC and Congress to focus on 4 areas: (1) Enhance enforcement and antitrust remedies to stop Bell companies from “leveraging” their local exchange strength in new Internet access and broadband services. (2) Strengthen local market access rules to assure competitive entry. (3) Stop Bell efforts to gain interLATA data relief. “There is no difference between voice and data and such legislation is a ploy to sidestep obligations,” CompTel said. (4) Support “strong FCC” to protect market-opening provisions of Act. Frisby complained that “Bell lawsuits” and creation of “behemoths” through Bell mergers have prevented Telecom Act from reaching its full potential. Group of CompTel members, representing companies breaking into telecom service in SBC territory in Southwest, said they still faced variety of bottlenecks in offering competitive DSL service, gaining access to unbundled network elements and other areas. “There is a reason why the local network was last to be opened to competition,” said Jerry James, pres. of facilities-based Grande Communications. “It was the hardest to open. It takes a lot of money, a lot of effort, going down every street” to lay cable. In answer to question, Frisby said he strongly disagreed with new FCC Chmn. Powell’s statement (CD Feb 7 p1) that one could deregulate before markets were competitive. That’s “absolutely wrong,” Frisby said. “It’s a license to loot.” In general, Powell is “very thoughtful person who is generally supportive of competition,” he said. CompTel members were in town to lobby on Capitol Hill Wed. and today (Thurs.) in opposition to Bell data relief and other issues. Competitors may be in for “long siege” as Bells redouble their efforts to gain data relief, Ernest Kelly, pres. of Assn. of Communications Enterprises, predicted in statement issued for Telecom Act anniversary. He said Bells undoubtedly would have “allies in this effort” on Hill, but “we are confident that in the end the Congress will not undo what took 17 years to achieve… a mechanism to open up the last phone monopoly.”
Newly elected to NAB boards: Radio -- JoAnn Fisher, WKIT/WZON, Bangor, Me.; Jerry Lee, WBEB, Philadelphia; Gunther Meisse WVNO/WRGM, Mansfield, O.; George DeVault, Holston Valley Bcstg., Kingsport, Tenn. TV -- Madalyn Bonnot, Emmis Communications; Alan Frank, Post-Newsweek Stations… Alicin Reidy named vp-public responsibility, MTV Networks… Robert Chrostowski, Iwatsu America, named to FCC Consumer/Disability Telecom Advisory Committee… James Gallagher, ex-KYW-TV, Philadelphia, named vp-gen. mgr., Comcast MarketLink Philadelphia… John Theodorakis, ex-Avaya, named vp-gen. counsel, HearMe… William Bolster promoted to chmn.-CEO, CNBC; Pamela Thomas-Graham, CNBC.com, moves to pres.-COO… Elected to Alliance for Telecom Industry Solutions-sponsored Network & Services Integration Forum: Kenneth Stephens, BellSouth, re-elected as chmn. and team member for industry relations; Ronald Roman, Telcordia, reelected vice chmn. and team member for bandwidth. Team members elected: Connie Hunt, SBC, security, and Andrew Walsh, Telcordia, protection/architecture.
Debating success or failure of Telecom Act (see separate story, this issue) is no academic matter in Congress, where several proposals would make significant changes. Most prominent include 2 heavily pushed by House Commerce Committee Chmn. Tauzin (R-La.): Loosening restrictions on Bell companies’ offering data services across long distance LATA lines and adding restrictions on FCC’s handling of merger reviews. While both have received great deal of support in theory, we're told both still face considerable difficulty winning passage this year.
If communications lobbyists could go back in time and rewrite Telecom Act, Bell companies would be first to grab their pens, with broadcasters close behind, according to interviews by staff of Communications Daily. We asked industry representatives, Capitol Hill officials and others what they would change if they could rewrite Act with benefit of 5 years’ hindsight. Cable representatives appeared least likely to want change, having won deregulation, capital and entry into telecom business through Act. Views of CLEC interests ranged from structural separation for Bell companies to stricter enforcement.
New FCC Chmn. Powell pressed competition rather than regulation on TV and radio issues in his first news conference since taking over 2 weeks ago (see separate story, this issue). Signaling clear break with Democratic-run Commission of last 8 years, he seemed to favor scrapping FCC’s broadcast ownership cap, which prohibits broadcasters from owning TV stations reaching more than 35% of U.S. households. He came out firmly against re- regulation of cable and expressed philosophical concerns about agency’s setting restrictions on indecent TV programming or imposing political free air time rules on broadcasters. But he also avoided taking strong stands on other key TV and radio issues, such as low-power FM (LPFM), DTV transition, cable open access mandates.
While ceding some of his agenda to traditional telecom topics, new House Telecom Subcommittee Chmn. Upton (R-Mich.) continues to seek focus on “using technology to better the lives of all Americans,” spokesman told us Tues. He said Upton wanted to pursue “initiatives in education, health, telecommuting and Internet pharmacies.” On telecom, Upton plans to examine FCC reform, broadband deployment issues, DTV transition and copyright protection on new technologies. He also wants to look at violence in media and telemarketing fraud, spokesman said. Chmn. hasn’t formulated specific positions on topics, he said.