USTA Chair: It’s time to stand our ground

BOCA RATON, Fla. – Incoming U.S. Telecom Association Chair Margaret Greene told USTA conference attendees today that the telecom industry is a “train wreck” and that association members need to stand together as never before to push through the regulatory relief needed to restore competitive balance to the industry.

With 500,000 jobs and about $2 trillion in market value lost, Greene said the telecom meltdown has reached “defcon 4” and placed the blame squarely at the feet of federal and state regulators whose policies she called “outdated and frozen in time.”

“The survival of our industry is at stake. Without question, it is time to stand our ground and fight,” Greene said.

Greene, who is president of regulatory and external affairs at BellSouth, said competition with cable and wireless providers “is a good thing” because it drives innovation. But she quickly added that the FCC’s “fixation” on forcing competition within the wireline sector is misguided and has removed any incentive the sector once had to invest in new broadband infrastructure.

“It may be well-intentioned, but current FCC policy reveals a profound lack of perspective,” Greene said.

She added that while the telecom industry is a vital national asset, it is not a nationalized asset and said the government owes the telecom industry the opportunity to develop pricing and strategies to place it on a par with its competitors, and to allow it to succeed or fail on its own merits.

“[Instead] the government decides who wins and who loses, where the investment goes, which platforms succeed,” Greene said. “That’s not how it’s supposed to work in this country.”

Greene outlined four major goals for her reign as USTA chair. Most critical is policy reform, specifically policies related to the unbundled network element platform (UNE-P). “That’s certainly one area where regulators have it dead wrong,” Greene said. “UNE-P creates a parasitic relationship – pure and simple.”

Though BellSouth’s average cost per line is about $44 and its region wide UNE-P rate about $20, Greene said UNE-P is not just a Bell company problem. She pointed to mid-sized carrier Alaska Communications Systems (ACS) as evidence. According to Greene, ACS’s typical loop costs about $33, but they are eligible for a universal service fund subsidy of $9, which brings the net cost down to $24. However, the TELRIC (total element long range incremental cost) price ACS is allowed to charge is $19, a net loss for each line of $5.

It gets worse, said Greene. When the access line gets transferred to a competitive carrier, the USF (universal service fund) subsidy goes with it, so the actual cost to the CLEC is just $10.

“Anything it charges the customer over $10 is pure profit,” said Greene. “And every loop it takes from ACS is a loss to the company that actually builds and maintains the facility.”

Green also hopes to build an industry-wide consensus on USF. She said it is important that all providers of telecommunications services pay into the fund in an equitable manner. Greene also said it was important to assure that the fund is used for its original purpose – to subsidize service to high-cost areas – and not as a “gravy train” for other platforms that don’t face higher costs, such as carriers that qualify under ETC (eligible telecommunications company) status and receive the same subsidy as the ILEC serving the territory, but whose operating costs are lower than those of the incumbent.

Also important is “reintroducing the nation” to the telecom industry. Greene said the industry suffers under an “incumbent monopoly” stereotype that “makes it hard for us to garner sympathy even in the most dire of economic circumstances.” She said the industry needed to invest “serious” time and resources to take its image back from its enemies.