Beyond Albany

No one can deny that local competition is already thriving here," says Chairman John O'Mara of the New York Public Service Commission, "and the PSC record...proves that beyond a doubt."

New York state, which cherishes its well-earned reputation for regulatory reform that truly promotes competition, again jumped in front of the regulatory curve by supporting Bell Atlantic's plans to market long-distance in the Empire State. That support is not unconditional. In fact, the PSC has defined a framework within which Bell Atlantic must nurture local exchange competition, including permitting OSS access and third-party testing. (See the story by News Editor Joan Engebretson on page 6.)

Actually, Chairman O'Mara errs on the narrow point. Powerful people in his world vigorously deny that "local competition is already thriving here"-or anywhere. These policy reactionaries include FCC commissioners, other policymakers and the long-distance companies.

The long-distance companies are motivated by a powerful, healthy sense of economic self-interest. Their business is intensely competitive. Once-enormous market share and once-robust margins are both under severe pressure. Now well-heeled, technologically sophisticated corporations with powerful brands and years of experience running superior networks want in, too.

The long-distance companies-lead by the two leaders, MCI and AT&T-want no part of that new competitive headache. So they are fighting to the last policy barricade to forestall it. That last barricade is the spurious charge that the local exchange market, alone of all telecom markets, remains a monopoly. The legendary bottleneck, the long-distance companies argue, combined with conscious anti-competitive behavior by the Bell companies, has preserved this notorious monopoly. Until that monopoly is crushed, they successfully argue, the RHCs should be forbidden to compete in the long-distance market.

This argument ignores:

* The rapid development of wireless

* The stunning successes of CAPs, CLECs and ISPs

* The power of new IP telephony and cable technologies, and last but far from least,

* The interests of consumers.

The policy reactionaries adroitly and purposefully confuse ownership of the wired (mainly copper) loop with control of the consumer. Because no one in her or his right mind would put together a competitive business based on constructing an alternate wired loop (copper, coax or fiber), this confusion serves as a conceptual redoubt of substantial strength.

If reform must await the satisfaction of the long-distance companies that the local exchange meets their definition of competitiveness, the new dawn will never come. Count on it: The long-distance companies can better defend their market share in the dismal half-light their lawyers and lobbyists sustain today than in the sunlight of a new competitive day.

But murky though their argument is, at least the motivation of the long-distance companies is clear. Most regulators are just confused. They seem to lack the intellectual will to grapple with the competing arguments, resolve those contradictions and move forward. Or perhaps what is missing is political will. In either case, most regulators are shirking their responsibility.

The New York PSC isn't shirking its responsibility. It proves that regulators aren't doomed to flail impotently and endlessly at this issue, that they can construct safeguards for local exchange consumers while acting to improve the competitive environment for long-distance consumers.

Hopefully, the FCC is taking notes.

Bell Atlantic's support for the safeguards, particularly competitive access to OSS elements, also undercuts the arguments of RHC dinosaurs who reject any suggestion that competitors should be able to interconnect with telco OSSs. The parentage of this argument goes back 30 years to the foolish assertion by Neanderthal executives of the then integrated Bell System that interconnection of any non-telco equipment (then meaning phones) would destroy the technical integrity of the network. This doomsday prophecy was wholly and laughably mistaken.

Technology can promote-and safeguard-competition. The New York PSC and Bell Atlantic both are wise to recognize this key reality.

And there is another important consumer safeguard to remember.

This country has antitrust laws. They work. No corporation is beyond their reach.

Long-distance consumers don't need new laws or new technology. They just need a new federal policy. Again, Albany points the way.