Cycle recycle

I think I've heard this one before. One telephony company offers all services. It's considered anti-competitive, and the company is splintered. More legislation brings competitors to the street like worms after a thunderstorm. The new open market breeds consolidation and competition. Then one telephone company offers all services.

Sound familiar? AT&T once provided nearly all telephone services. Citing monopolistic business practices, the feds broke it up, and the RBOCs were born to offer local service while AT&T maintained the long-distance part. The breakup of one service provider into many fueled competition on a local, national and international scale. The Telecom Act of 1996, which forced the regional incumbents to open access to the local loop, was a further push to create a more competitive telephony landscape.

Initially, the RBOCs flagrantly resisted opening their networks to competitive carriers. Only with the carrot of winning Section 271 approval did they begin working with CLECs to open their service markets. But it hasn't been easy for either side.

The irony here is that we're starting all over again, only this time it's in the name of competition. The FCC granted Bell Atlantic approval to offer long-distance services in New York, effective Jan. 3. A scant two days later, the carrier will roll out service to consumers; business customers will be targeted shortly.

And so the cycle begins (again). Bell Atlantic, now with GTE, can offer local and long-distance services - just like AT&T did. This time, however, regulators argue that consumers will benefit - that the breakup of AT&T and the Telecom Act were successful. Choice is rampant.

But for how long? With the new millennium we've begun a new cycle. Let's play this out. In 2000, Bell Atlantic will offer local, long-distance and a host of other services. SBC/Ameritech and BellSouth are hot on Bell Atlantic's trail and are expected to file applications shortly. They will probably be granted Section 271 approval in Texas and Georgia, respectively, before the year's end.

With incumbent status, these carriers have access to the most customers in any given region and with the mix of services they can now offer, presumably they will solidify and expand their respective customer bases. They will be able to offer lower rates, tiered pricing and assorted service-based discounts. They'll probably swallow a few competitive service providers or perhaps merge with other service provider conglomerates. That will limit choices in the market. The remaining CLECs - backed by consumers - will tap on the FCC's shoulder and point to monopolistic practices. The FCC will then break up Bell Atlantic/GTE, BellSouth and/or SBC/Ameritech to level the playing field. And the cycle will begin again.

I'm not saying that's a bad thing. Change is necessary for growth. Businesses, markets, consumers and competitors fluctuate continually. In a constantly changing business environment, rigidity equals failure. All service providers - RBOCs, CLECs, IXCs, global carriers - need someone to shake up the game occasionally. Competition forces carriers to be more aggressive on many fronts, such as pricing, service offerings and customer service. Surely consumers will win. More choice translates to greater innovation, and service providers will push their own network designers and their suppliers to step up to the challenge that awaits. Cause for concern only comes if the largest players quash others and development stagnates. Surely regulators will keep an eye on Bell Atlantic to ensure that it follows through on the spirit and intent of the Telecom Act.

This is just the beginning.