Dereg dilemmas

Competition works, right? It seems to be working, in some ways at least. There are success stories. There is subscriber growth. There are even price battles going on at many levels.

Yet, you are thinking that things are not completely as they should be. The competitive environment is not the stabilized nirvana some people hoped it would be by now - nearly three-and-a-half years after the passage of the Telecom Act.

There has been much evidence of this recently. In Washington, during the past week or so, there may have been more intense regulatory debate echoing down hallowed halls than at any time since the final months before the ratification of the Telecom Act. The issues: Should cable TV operators offering Internet access be allowed to keep their networks closed to competitors? Should it be easier, from a regulatory perspective, for incumbent local exchange carriers to offer broadband services? Should long-distance carriers be allowed to charge extra fees to customers who use long-distance infrequently? And, by the way, what's the status of the so-called regulatory framework that was supposed to make implementation of the Telecom Act easier?

Competition works? You wouldn't know from the debate and discussion that has been going on. In fact, it appears that these stubborn, lingering regulatory issues still are suffocating the potential for open competition - before or since the Telecom Act. What was the Telecom Act, really, if no progress has been made with many of the most critical competitive issues since its passage? Was it a starting gun for competition? Did it open markets in any measurable way?

No. The fact remains that three-and-a-half-years after what was supposed to be the watershed event of a 100-year-old industry, the Telecom Act has not significantly spurred competition. That 14-point checklist, once so lauded and seemingly very suitable as both carrot and stick to drive local competition and get incumbents into long-distance, is a dusty and unused document. Meanwhile, no broadly affecting decisions have been made regarding how to better implement the Telecom Act.

Rather, some of the most topical regulatory debate seems to be headed in a very unsettling direction. New potential legislation would ease regulations on RBOC data services and possibly allow data-offering cable TV companies to keep their doors shut to competitors. On another issue, the prevailing mindset of federal regulators would allow long-distance carriers to charge their least-intensive users extra fees.

Something is terribly wrong here. Current efforts on all these fronts seem poised to protect the interests of the largest, least progressive companies in all segments of the telecom industry.

Easing data restrictions on RBOCs makes it easier for them to compete in one part of the market, even while they fail to provide adequate interconnection programs to CLECs in their regions. In theory, keeping cable TV networks closed would help cable operators build a competitive beachhead elsewhere, but it would be too much of an advantage to a cable-owning giant such as AT&T. Also, it would be too much of a double standard for one part of the industry to be closed at a time when all parts of it should be declared open.

The situation with long-distance carriers is no different. If they want competition to work for them as they seek to offer new types of services, they have to accept a certain period of adjustment to competitive reality. Separate billing for them currently means dealing with some customers who may not be profitable accounts. The future of bundled service will change this picture, but not accepting a competitive pill now could be one more hurdle helping to stall progress for everyone.

Meanwhile, the companies drowning in all of the regulatory, anti-competitive muck are the very companies deregulation was supposed to assist the most. The environmental conditions for new local carriers and smaller ISPs should be the top considerations in all current and future regulatory discussions. These companies have made progress on their own tracks and from their own efforts - but the tide is pushing hard against them. If it doesn't give, the reason for the Telecom Act will be lost. The thing its was meant to be - a leveler for the competitive playing field - could be forgotten.

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