IN WORLDCOM'S WAKE, DEREGULATION IS DEBATED

The relative stability of most ILECs and WorldCom's revelations has some questioning deregulation's pace.

Regulation, of course, is anathema to Bell companies, which see it as an impediment to investment. Total deregulation, though, isn't realistic, said Bill Daley, president of SBC Communications.

“There's no such thing as total deregulation,” Daley said. “Even hot dog stands are regulated. The government isn't going to tell them what kind of hot dogs to sell or at what price, but you can be sure the health department is paying attention.”

Further deregulation would spark long overdue industry consolidation, which would keep investors in the sector, said Rich Black, telecom analyst at Blaylock & Partners.

“There are just too many companies out there at this point in time,” Black said.

But Blake Kirby, a vice president at Adventis, pointed to the airline industry as an example of deregulation's effect.

In the earliest stages of airline deregulation, a rush of new entrants drove fares down. Most of those airlines are gone, and the government has been forced to bail out the industry.

“You could argue that the airlines should never have been deregulated.”

Even if carriers were unshackled immediately, it might not be enough to pull telecom out of the morass in the wake of WorldCom, said Scott Cleland, CEO of Precursor Group.

“It would be a small step forward, but regulatory changes now will most likely be too little, too late.”

With additional reporting by Toby Weber in Chicago.