LEXIS-NEXIS® Congressional Universe-Document

Search Terms: telecommunications act of 1996, House or Senate or Joint

Document 277 of 383.

View Related Topics

JUNE 24, 1999, THURSDAY

SECTION: IN THE NEWS

LENGTH: 3636 words

HEADLINE: PREPARED TESTIMONY OF
MR. DAVE SCOTT
PRESIDENT AND CEO
BIRCH TELECOM
BEFORE THE HOUSE COMMERCE COMMITTEE
TELECOMMUNICATIONS, TRADE
AND CONSUMER PROTECTION SUBCOMMITTEE

BODY:

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE, I AM DAVE SCOTT, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF BIRCH TELECOM, INC. BIRCH IS A SMALL BUT GROWING COMPETITIVE LOCAL EXCHANGE CARRIER HEADQUARTERED IN KANSAS CITY, MISSOURI. I AM TESTIFYING TODAY ON BEHALF OF BIRCH AND THE COMPETITIVE TELECOMMUNICATIONS ASSOCIATION.
THANK YOU FOR INVITING ME TO TESTIFY BEFORE THE SUBCOMMITTEE TODAY ON ISSUES REGARDING THE DEPLOYMENT OF DATA SERVICES. THE PROMPT AND WIDESPREAD AVAILABILITY OF INTERNET AND OTHER DATA SERVICES IS OF VITAL IMPORTANCE TO AMERICANS THROUGHOUT THE NATION.
THERE IS NO LONGER DEBATE ON WHETHER SUCH SERVICES HAVE REVOLUTIONIZED THE WAY WE CONDUCT OUR PERSONAL AND BUSINESS AFFAIRS. THE DEBATE NOW CENTERS INSTEAD ON WHAT POLICIES WILL BEST PROMOTE THE PROMPT AVAILABILITY OF DATA SERVICES TO ALL OUR CITIZENS, INCLUDING THOSE IN RURAL AS WELL AS URBAN AREAS. THE GOOD NEWS IS THAT DATA SERVICES ALREADY ARE BEING RAPIDLY DEPLOYED. DIAL UP INTERNET ACCESS VIA A LOCAL PHONE CALL CURRENTLY IS AVAILABLE TO MORE THAN 95 PERCENT OF THE POPULATION AND CARRIERS AND INTERNET SERVICE PROVIDERS AROUND THE COUNTRY ARE FOCUSSED ON HOW TO SERVE THAT REMAINING 5 PERCENT.
HIGHER SPEED ACCESS TO THE INTERNET AND OTHER HIGHER SPEED DATA SERVICES ALSO ARE BEING DEPLOYED AT A RAPIDLY ACCELERATING PACE. COMPETITIVE LOCAL EXCHANGE CARRIERS, SUCH AS BIRCH, ARE USING UNBUNDLED NETWORK ELEMENTS IN CONJUNCTION WITH THEIR OWN EQUIPMENT AND FACILITIES TO PROVIDE DIGITAL SUBSCRIBER LINE (ADSL), ASYNCHRONOUS TRANSFER MODE (AATM), FRAME RELAY AND OTHER HIGH SPEED DATA FACILITIES AND SERVICES TO RESIDENTIAL AND BUSINESS CUSTOMERS. THE GROWTH IN HIGH SPEED DATA SERVICES PROVIDED BY CABLE TELEVISION COMPANIES AND SATELLITE CARRIERS ALSO HAS BEEN RAPID. THE STIMULUS OF ALL THIS COMPETITION SPURRED BY THE TELECOMMUNICATIONS ACT OF 1996 HAS ALSO HAD A POSITIVE EFFECT ON THE BELL COMPANIES. THE BELL COMPANIES, IN RESPONSE TO THESE COMPETITIVE STIMULI, ARE AGGRESSIVELY ROLLING OUT DSL SERVICES THAT USE THEIR INVESTMENT IN UBIQUITOUS COPPER LINE FACILITIES.
THIS RAPID EXPANSION IS, HOWEVER, POTENTIALLY THREATENED BY PROPOSED LEGISLATION THAT MAY INADVERTENTLY DISRUPT THE COMPETITION-FUELED PROGRESS MADE TO DATE. SUCH LEGISLATION WOULD (1) EXEMPT THE BELL COMPANIES FROM THEIR CURRENT OBLIGATIONS UNDER THE TELECOMMUNICATIONS ACT OF 1996 TO MAKE THEIR DATA FACILITIES AND SERVICES AVAILABLE TO CLEC'S AND (2) ALLOW THE BELL COMPANIES TO PROVIDE LONG DISTANCE DATA SERVICES BEFORE THEY OPEN THEIR LOCAL EXCHANGE MARKETS TO COMPETITION.
ALTHOUGH THE GOAL OF THESE BILLS IS THE LAUDATORY ONE OF SPURRING THE DEPLOYMENT OF DATA SERVICES BY THE BELL COMPANIES, PARTICULARLY TO RURAL AREAS, I AM CONVINCED THAT THE BILLS, IF ENACTED, WOULD NOT SERVE THEIR INTENDED PURPOSE. TO BEGIN WITH, THE BELL COMPANIES, BY DESIGN, DO NOT SERVE MANY OF THE NATION'S RURAL AREAS. FURTHER, AS NOTED ABOVE, THE BELL COMPANIES IN RESPONSE TO THE KINDS OF COMPETITIVE PRESSURES CONTEMPLATED BY THE 1996 ACT ALREADY ARE AGGRESSIVELY DEPLOYING DATA SERVICES.
FINALLY, I AM GREATLY CONCERNED THAT THE PRACTICAL EFFECT OF SUCH LEGISLATION, IF ENACTED, WOULD BE TO POSITION THE BELL COMPANIES TO RE-ESTABLISH THEMSELVES AS MONOPOLY CARRIERS IN BOTH THE LOCAL AND LONG DISTANCE MARKETS FOR BOTH VOICE AND DATA SERVICES. THE PUBLIC INTEREST WOULD BE ILL-SERVED BY SUCH A RESULT. I BELIEVE THE BETTER POLICY IS TO ENCOURAGE COMPETITION AMONG DATA SERVICE PROVIDERS WITHIN THE FRAMEWORK ESTABLISHED BY THE 1996 ACT. SUCH A POLICY WILL FAR BETTER SERVE THE INTERESTS OF THE AMERICAN PUBLIC.
BEFORE I TURN TO MY SPECIFIC REASONS FOR URGING YOU TO ADHERE TO THE POLICIES ESTABLISHED BY THE 1996 ACT, IT MAY BE HELPFUL IF I PROVIDE YOU SOME INFORMATION ABOUT BIRCH.
ABOUT BIRCH BIRCH INITIATED LOCAL SERVICE IN MARCH 1997 AND NOW SERVES APPROXIMATELY 50,000 ACCESS LINES. WE EMPLOY 650 PEOPLE, INCLUDING 220 AT OUR HEADQUARTERS IN KANSAS CITY, AND 225 EMPLOYEES IN EMPORIA, KANSAS WHERE OUR CUSTOMER SERVICE AND CALL CENTER IS LOCATED.
WE SERVE CUSTOMERS PRIMARILY IN MISSOURI, KANSAS AND TEXAS. IN MISSOURI, WE OPERATE IN KANSAS CITY, ST. LOUIS AND ST. JOSEPH, AND HAVE CUSTOMERS LOCATED THROUGHOUT THE STATE, INCLUDING CARTHAGE, CHILLICOTHE AND SPRINGFIELD. IN KANSAS, WE HAVE CUSTOMERS IN EVERY COUNTY AND HAVE SUBSTANTIAL OPERATIONS IN WICHITA, TOPEKA, MANHATTAN, LAWRENCE, EMPORIA, SALINA AND DODGE CITY. IN TEXAS, WE RECENTLY BEGAN OPERATIONS IN FORT WORTH, BEAUMONT, WACO, TYLER AND HOUSTON.
WE OFFER A MENU THAT INCLUDES LOCAL AND LONG DISTANCE SERVICES, HIGH- SPEED INTERNET ACCESS SERVICES AND CUSTOMER PREMISES EQUIPMENT TO RESIDENTIAL AND SMALL AND MID-SIZED BUSINESS CUSTOMERS. FORTY PERCENT OF OUR CUSTOMERS ARE RESIDENTIAL CUSTOMERS.
IN ADDITION TO OUR VOICE-ORIENTED CIRCUIT SWITCHES IN KANSAS CITY, ST. LOUIS AND WICHITA THAT ROUTE LOCAL AND LONG DISTANCE CALLS, WE ARE DEPLOYING AN ATM PACKET SWITCHING NETWORK. PACKET SWITCHES INITIALLY ARE BEING INSTALLED IN KANSAS CITY, ST. LOUIS, WICHITA AND FORT WORTH. THESE DATA-ORIENTED PACKET SWITCHES WILL BE LINKED BY HIGH-SPEED ATM TRANSPORT FACILITIES. FOR REASONS I'LL EXPLAIN SHORTLY, I WANT TO EMPHASIZE THAT WE PLAN TO USE THIS PACKET SWITCHING NETWORK TO CARRY VOICE AS WELL AS DATA TRAFFIC.
WE PROVIDE OUR SERVICES THROUGH OUR OWN SWITCHING EQUIPMENT AND, PURSUANT TO PROVISIONS OF THE 1996 ACT, THROUGH USE OF LEASED NETWORK FACILITIES AND RESOLD SERVICES OBTAINED PRIMARILY FROM SOUTHWESTERN BELL.
SOUTHWESTERN BELL IS ALSO OUR PRINCIPAL COMPETITOR. ALTHOUGH IT HAS BEEN A STRUGGLE, AND ALTHOUGH WE STILL ARE A SMALL COMPANY, WE HAVE GROWN INTO ONE OF THE LARGER CLEC'S IN THE TERRITORY SERVED BY SOUTHWESTERN BELL.
THAT'S WHO WE ARE TODAY. TOMORROW, IF WE CONTINUE TO WORK HARDER AND SMARTER THAN OUR COMPETITORS, AND IF THE RULES OF THE GAME REMAIN FAIR, WE EXPECT TO EMERGE AS A MAJOR REGIONAL PROVIDER OF DATA AND OTHER TELECOMMUNICATIONS SERVICES TO SMALL AND MID-SIZED BUSINESSES AND RESIDENTIAL CUSTOMERS.
THE RULES OF THE GAME
THE RULES OF THE GAME WERE SET BY THE 1996 ACT, A LAW WHICH SEVERAL OF YOU ON TODAY'S SUBCOMMITTEE WERE INSTRUMENTAL IN FASHIONING. OVERALL, I BELIEVE THE ACT ESTABLISHED A REASONABLE BALANCE BETWEEN THE INTERESTS OF INCUMBENT LOCAL EXCHANGE CARRIERS AND COMPETITORS, SUCH AS BIRCH, WHO WANT TO ENTER LOCAL MARKETS. MOST IMPORTANTLY, THE ACT RECOGNIZED THAT BECAUSE INCUMBENT CARRIERS HAVE STRONG ECONOMIC INCENTIVES TO MAINTAIN THEIR DE FACTO CONTROL OF ESSENTIAL BOTTLENECK FACILITIES, BOTH A STICK AND A CARROT WILL BE REQUIRED TO OPEN THE LOCAL EXCHANGE MARKET.

THE STICK AND THE CARROT
THE STICK IS THE MANDATE OF SECTIONS 251 AND 252 OF THE ACT REQUIRING INCUMBENTS TO OPEN THEIR MARKETS TO NEW ENTRANTS BY MAKING AVAILABLE INTERCONNECTION, ACCESS TO UNBUNDLED NETWORK ELEMENTS AND RESALE ON JUST, REASONABLE AND NONDISCRIMINATORY TERMS. ACCESS TO SUCH FACILITIES AND SERVICES IS ABSOLUTELY ESSENTIAL TO CLEC'S SUCH AS BIRCH. INCUMBENTS MUST BE HELD TO STRICT ACCOUNTABILITY UNDER THE ACT, AND THE FCC MUST BE WILLING TO ASSESS FINES AND AWARD DAMAGES WHEN INCUMBENTS FAIL TO COMPLY WITH THEIR OBLIGATIONS TO COMPETITORS.
EQUALLY IMPORTANT, INCUMBENT CARRIERS THAT DO NOT COMPLY WITH THE ACT MUST NOT GET TO EAT THE CARROT. THE CARROT IS THE OFFER IN SECTION 271 TO ALLOW THE INCUMBENT LOCAL CARRIERS INTO THEIR IN-REGION LONG DISTANCE MARKETS ONCE THEY HAVE OPENED THEIR MONOPOLY LOCAL MARKETS TO COMPETITION. TO DATE, BASED ON THEIR BEHAVIOR, THE BELL COMPANIES HAVE NOT BEEN STRONGLY DRAWN TO THE CARROT OF LONG DISTANCE VOICE SERVICE. PERHAPS THAT IS BECAUSE PRICES AND PROFIT MARGINS FOR LONG DISTANCE VOICE TRAFFIC HAVE BEEN PLUMMETING SINCE THE PASSAGE OF THE ACT.
IT'S A DIFFERENT MATTER FOR LONG DISTANCE DATA TRAFFIC. THAT'S A CARROT OVER WHICH THE INCUMBENT CARRIERS HAVE STARTED TO DROOL, AND THEY ARE SEARCHING FOR WAYS TO ENTER THAT MARKET WITHOUT HAVING TO COMPLY WITH THE OBLIGATIONS OR SEEK THE INCENTIVES OF THE 1996 ACT. FOR SEVERAL REASONS, I URGE YOU NOT TO LET THAT HAPPEN.
VOICE TRAFFIC CAN AND WILL FLOW OVER DATA NETWORKS
IF THE BELL COMPANIES ARE ALLOWED TO ESTABLISH DATA NETWORKS ON AN INTERLATA BASIS, IT WON'T BE JUST DATA TRAFFIC FLOWING OVER THOSE NETWORKS. THERE WILL BE VOICE TRAFFIC AS WELL. I AM AWARE THAT THE PROPOSED LEGISLATION CONTAINS A BAN ON ANY BELL COMPANY USING THE INTERNET OR OTHER PACKET SWITCHING NETWORKS TO CARRY VOICE-ONLY TRAFFIC UNTIL IT HAS SATISFIED SECTION 271 REQUIREMENTS. AS A PRACTICAL MATTER, THAT BAN IS INEFFECTIVE.
EVEN IF THE BAN COULD BE ENFORCED, WHICH IT CANNOT, IT APPLIES SOLELY TO TWO-WAY VOICE-ONLY TRAFFIC. THIS LEAVES A GAPING LOOPHOLE THAT WOULD ALLOW INCUMBENT CARRIERS TO CARRY VOICE TRAFFIC ON TRUNKS AS LONG AS SOME NOMINAL PERCENT OF THE TOTAL TRAFFIC ON THE TRUNK WERE NON-VOICE OR ONE-WAY VOICE. AS I MENTIONED EARLIER, BIRCH IS IN THE PROCESS OF DEPLOYING PACKET SWITCHING NETWORKS. WE KNOW HOW SUCH NETWORKS OPERATE. WHEN FULLY DEPLOYED, PACKET SWITCHING NETWORKS ARE EQUALLY CAPABLE OF SUPPORTING BOTH HIGH BANDWIDTH APPLICATIONS AND TRADITIONAL VOICE CALLS. BECAUSE PACKETS FROM THE SAME COMMUNICATION WILL TRAVEL OVER A NUMBER OF DIFFERENT PATHS SIMULTANEOUSLY, IT IS IMPOSSIBLE TO LIMIT USERS TO DATA TRAFFIC OR TO POLICE EFFECTIVELY THE TRANSMISSION OF VOICE CALLS OVER SUCH NETWORKS. A LEAKAGE OF VOICE TRAFFIC WOULD BE UNCONTROLLABLE, EVEN IN THE UNLIKELY EVENT THE BELL COMPANIES WERE MOTIVATED TO POLICE THEIR CUSTOMERS' TRAFFIC.
ALLOWING THE BELL COMPANIES TO PROVIDE INTERLATA DATA SERVICES NOW WOULD BLOW APART THE CENTRAL PREMISE OF THE 1996 ACT: THAT THE BELL COMPANIES BE ALLOWED INTO LONG DISTANCE SERVICE ONLY AFTER OPENING THEIR MONOPOLY LOCAL MARKETS.
BIRCH'S EXPERIENCE WITH SOUTHWESTERN BELL
EVEN WITH THE OBLIGATIONS AND INCENTIVES THE 1996 ACT IMPOSES ON AND OFFERS TO THE BELL COMPANIES TO OPEN THEIR LOCAL EXCHANGE MARKETS TO COMPETITION, BIRCH'S EXPERIENCE IN DEALING WITH SOUTHWESTERN BELL HAS BEEN, AND STILL IS, AN EXASPERATING ONE. I HAVE ATTACHED TO THIS TESTIMONY AS EXHIBIT 1 AND EXHIBIT 2, TESTIMONY THAT BIRCH HAS PRESENTED IN STATE PROCEEDINGS THAT DISCUSSES SOME OF THE BELL TACTICS BIRCH HAS ENCOUNTERED. TO SUMMARIZE JUST A FEW OF THE AREAS (DETAILS ARE PROVIDED IN THE EXHIBITS):
COLLOCATION: SOUTHWESTERN BELL HAS IMPOSED UNREASONABLE CONDITIONS IN TERMS OF PRICE (RECURRING AND NON-RECURRING), CONSTRUCTION REQUIREMENTS, APPLICATION AND SPECIFICATION REQUIREMENTS, DELIVERY DATES, AND PREMISES ACCESS, THE CUMULATIVE EFFECT OF WHICH IS TO DETER POTENTIAL LOCAL COMPETITORS, SUCH AS BIRCH, FROM ENTERING THE LOCAL MARKET. THESE CONDITIONS STRIKE BIRCH PARTICULARLY HARD, AS WE SERVE THE MARKET BROADLY. IF WE WANTED TO LIMIT OUR CUSTOMERS TO BIG BUSINESSES IN DOWNTOWN AREAS, THE NUMBER OF COLLOCATION ARRANGEMENTS WOULD BE FEW. BUT BIRCH BELIEVES THAT SMALL BUSINESSES AND RESIDENTIAL CUSTOMERS DESERVE THE BENEFITS OF COMPETITION TOO, AND IN LARGE CITIES THEY ARE SERVED BY DOZENS OF DIFFERENT SOUTHWESTERN BELL CENTRAL OFFICES, MULTIPLYING THE EFFECT OF THESE POLICIES.
COLLOCATION REVISITED: ON TOP OF IMPOSING UNREASONABLE COLLOCATION PRACTICES, SOUTHWESTERN BELL THEN MAKES IT VERY DIFFICULT TO COMPETE WITHOUT ACCEPTING UNREASONABLE TERMS AND CONDITIONS. FOR EXAMPLE, SOUTHWESTERN BELL DOES NOT MAKE AVAILABLE WITHOUT UNREASONABLE CHARGES IN MISSOURI OR KANSAS A COMBINATION OF THE UNBUNDLED LOOP WITH A MULTIPLEXER AND TRANSPORT TO CREATE A SINGLE UNBUNDLED NETWORK ELEMENT, KNOWN AS AN EXTENDED LOOP OR ENHANCED EXTENDED LOOP (EEL). THE EEL MAKES IT POSSIBLE FOR CLECS TO COLLOCATE AT ONE CENTRAL OFFICE WHICH THEN PROVIDES ACCESS TO SEVERAL OTHERS. ONCE AGAIN, THESE POLICIES CONSTRAIN THE GEOGRAPHIC AREA THAT BIRCH CAN AFFORD TO COVER.
ARBITRATION DELAYS: SOUTHWESTERN BELL HAS REFUSED TO EXECUTE AN INTERCONNECTION AGREEMENT REACHED AS A RESULT OF AN ARBITRATION ORDER. SOUTHWESTERN BELL IS TRYING TO FORCE A RENEGOTIATION OF THE AGREEMENT DESPITE EFFORTS AT COMPROMISE.
UNE-P
UNE-P ALLOWS A COMPETITOR TO PURCHASE A COMPLETE PACKAGE OF NETWORK ELEMENTS COMBINED TO PROVIDE SERVICE TO THE COMPETITOR'S CUSTOMER. EVEN THOUGH SOUTHWESTERN BELL HAS SIGNED AGREEMENTS IN TEXAS AND MISSOURI ALLOWING UNE-P, BIRCH CANNOT GET SOUTHWESTERN BELL TO PROVIDE THE SERVICE IN KANSAS WITHOUT UNREASONABLE CHARGES.
RESALE: SOUTHWESTERN BELL REFUSES TO ALLOW BIRCH TO RESELL CUSTOMER SPECIFIC ARRANGEMENTS OR CONTRACT ARRANGEMENTS AT THE STANDARD RESALE DISCOUNT. IN FACT, SOUTHWESTERN BELL EVEN REFUSES TO ALLOW BIRCH TO ASSUME THE LIABILITY ON THOSE CONTRACTS AND RESELL THEM TO BIRCH'S CUSTOMERS WITH NO REDUCTION IN THE AMOUNTS PAYABLE TO SOUTHWESTERN BELL. RATHER, SOUTHWESTERN BELL TAKES THE POSITION THAT ANY ATTEMPT TO CONVERT THE SERVICE COVERED BY THE CONTRACT REQUIRES THE CUSTOMER TO PAY LARGE TERMINATION FEES TO SOUTHWESTERN BELL.
OPERATIONAL SUPPORT SYSTEMS: THESE SYSTEMS SIMPLY ARE INADEQUATE AND FAIL TO PROVIDE COMPETITORS SUCH AS BIRCH THE ABILITY TO PROVIDE THEIR CUSTOMERS THE SAME LEVEL OF SERVICE AS SOUTHWESTERN BELL REPRESENTATIVES ARE ABLE TO PROVIDE SOUTHWESTERN BELL CUSTOMER'S USING SOUTHWESTERN BELL'S INTERNAL SYSTEMS, AS REQUIRED BY THE STATUTE. DETAILS ARE PROVIDED IN EXHIBIT 2.
DIRECTORY LISTING: SINCE 1997 BIRCH HAS FROM TIME TO TIME FOUND CUSTOMERS THAT HAD LISTINGS IN THE SOUTHWESTERN BELL TELEPHONE DIRECTORY OMITTED AFTER THEY CONVERTED TO BIRCH. IN LATE 1998, SOUTHWESTERN BELL ADMITTED THAT A PROBLEM HAD BEEN FOUND AND REPORTED THAT IT HAD BEEN FIXED. JUST THIS PAST MONDAY, JUNE 21, 1999, ANOTHER OMISSION WAS FOUND. HOW LONG MUST WE WORK BEFORE THIS PROBLEM IS FIXED? WHAT INCENTIVE DOES SOUTHWESTERN BELL HAVE TO FIX THIS?
LOCKING IN CUSTOMERS: SOUTHWESTERN BELL'S CUSTOMER CHOICE PROTECTION (CCP) IS A SERVICE OFFERED TO SOUTHWESTERN BELL END USERS THAT ALLOWS A CUSTOMER TO PROHIBIT A CHANGE IN THE CUSTOMER'S INTERLATA AND/OR LOCAL SERVICE PROVIDER WITHOUT THE CUSTOMER'S CONSENT. BIRCH BELIEVES SUCH ANTI-SLAMMING PROCEDURES HAVE BECOME NECESSARY. BUT SOUTHWESTERN BELL PUT ITS SYSTEM IN PLACE WITH INADEQUATE MECHANISMS FOR A CUSTOMER TO REMOVE THE CCP SO THE CUSTOMER COULD CHANGE HIS OR HER SERVICE TO A SOUTHWESTERN BELL COMPETITOR. ONLY AFTER SEVERAL MONTHS OF PRODDING BY BIRCH AND THE INTERVENTION OF THE FCC DID SOUTHWESTERN BELL PUT THESE PROCEDURES IN PLACE. AS YET, THEY ARE NOT FULLY FUNCTIONING. AS A RESULT, IT IS A STRUGGLE FOR MANY CUSTOMERS TO ATTEMPT TO CONVERT TO BIRCH.
EARLY DISCONNECTION OF SERVICE: IN SEVERAL CASES SOUTHWESTERN BELL HAS DISCONNECTED THE CUSTOMER'S SOUTHWESTERN BELL SERVICE BEFORE THE SPECIFIED TIME FOR CONVERSION OF THE CUSTOMER SERVICE TO BIRCH AND LEFT THE CUSTOMER WITHOUT ANY TELEPHONE SERVICE. THIS HAS HAPPENED TO BUSINESS CUSTOMERS. THE END RESULT IS THAT SOME CUSTOMERS ARE NOW AFRAID TO MOVE THEIR SERVICE.
COORDINATION ON INSTALLATION OF NEW UNE LOOPS: THE SYSTEMS AND PROCEDURES SOUTHWESTERN BELL HAS IN PLACE TO PROVIDE UNBUNDLED LOOPS MAKE THE SERVICE MUCH MORE COMPLICATED AND PROVIDE FOR MANY POTENTIAL PROBLEMS UPON CONVERSION. PROBLEMS SUCH AS POOR LOOP QUALITY, MISSING CROSS-CONNECTIONS, AND LACK OF COORDINATION AT CUTOVER ARE ALL COMMON PROBLEMS ENCOUNTERED.
BILLING ISSUES: SOUTHWESTERN BELL IGNORES DUE DATES AND DEADLINES.

OVER THE LAST YEAR SOUTHWESTERN BELL HAS REPEATEDLY FAILED TO DELIVER BILLING INFORMATION WHICH BIRCH MUST HAVE IN ORDER TO BILL OUR CUSTOMERS. IN THE LAST 10 DAYS, SOUTHWESTERN BELL HAS AGAIN FAILED TO PROVIDE A GROUP OF MONTHLY BILLING RECORDS AND INFORMATION. SOUTHWESTERN BELL'S FAILURE TO PROVIDE THE BILLING RECORDS IN THE PROPER MANNER HAS FORCED BIRCH TO SUSPEND ITS OWN BILLING, BRINGING BIRCH'S CASH FLOW TO A HALT. YET, SOUTHWESTERN BELL DEMANDS PROMPT PAYMENTS.
BIRCH AS AN AGENT OF THE CUSTOMER: UPON RECEIVING WRITTEN AGREEMENT FROM THE CUSTOMER, IN THE FORM OF A LETTER OF AGENCY IN THE FORM REQUIRED BY SOUTHWESTERN BELL, BIRCH MAY ACT AS THE CUSTOMER'S AGENT, AND SHOULD BE TREATED IN EXACTLY THE SAME MANNER AS THE END USER BY SOUTHWESTERN BELL. THIS IS GENERALLY NOT THE CASE. FOR EXAMPLE, SOUTHWESTERN BELL PROVIDES INFORMATION TO A RETAIL END USER DIRECTLY WITHIN AN HOUR OF THE REQUEST. WHEN BIRCH REQUESTS THE SAME INFORMATION THE RESPONSE NORMALLY TAKES SEVERAL DAYS. IT HAS RECENTLY BECOME SOUTHWESTERN BELL'S PRACTICE TO WHITE OUT ANY RETAIL PRICING INFORMATION BEFORE THE INFORMATION IS SENT TO BIRCH.
THERE ARE MANY OTHER EXAMPLES. BUT I WILL END THIS DISCUSSION BY MENTIONING ONE OF SOUTHWESTERN BELL'S MOST EFFECTIVE TACTICS. SOUTHWESTERN BELL CONTINUES TO UNDER-RESOURCE ITS CLEC ACCOUNT TEAMS. FOR EXAMPLE, FOR MANY YEARS THE INTEREXCHANGE CARRIER ACCOUNT TEAMS HAVE BEEN ASSIGNED A TECHNICAL REPRESENTATIVE TO DEAL WITH THE MANY OPERATIONAL ISSUES. WE KNOW THE ACCOUNT TEAMS HAVE REQUESTED THIS TECHNICAL SUPPORT AND YET SOUTHWESTERN BELL MANAGEMENT HAS NOT ALLOCATED THE REQUIRED RESOURCES. THIS RESULTS IN SERVICE DISRUPTIONS AND DELAYS IN PROVIDING SERVICES FOR COMPANIES LIKE BIRCH, WHO ARE COMPETITORS OF SOUTHWESTERN BELL.
SOUTHWESTERN BELL'S TACTICS ARE A REPLAY OF THE TYPES OF RESISTANCE MCI AND OTHER COMPETITIVE CARRIERS ENCOUNTERED IN OPENING UP THE LONG DISTANCE MARKET TO COMPETITION. I FIRST ENTERED THE TELECOMMUNICATIONS BUSINESS IN THE PRE-DIVESTITURE DAYS OF THE EARLY 1980'S. BACK THEN, MCI AND OTHERS REFERRED TO AT&T AS THE 800 POUND GORILLA.
WITH SOUTHWESTERN BELL, BIRCH FEELS LIKE IT'S DEALING WITH A 1500 POUND MULE. EVEN WITH THE STICK OF SECTIONS 251 AND 252, AND THE CARROT OF 271, WE'RE HAVING A HARD TIME GETTING IT TO MOVE.
THE 1500 POUND MULE SOUTHWESTERN BELL'S BEHAVIOR REMINDS ME OF A QUOTE ATTRIBUTED TO LYNDON JOHNSON WHEN HE WAS PRESIDENT. ONE AFTERNOON, AFTER THE PROTESTS AGAINST THE VIETNAM WAR HAD BEGUN TO INTENSIFY, THE PRESIDENT, WHO HAD GROWN UP IN THE HILL COUNTRY OF TEXAS, ASSEMBLED HIS BELEAGUERED STAFF. BOYS, HE SAID, WE'VE GOT TO HUNKER DOWN LIKE A JACKASS IN A RAINSTORM.
I FEEL LIKE THAT SAME GUIDANCE MUST HAVE BEEN OFFERED AT SOUTHWESTERN BELL HEADQUARTERS FOLLOWING THE PASSAGE OF THE 1996 ACT. CERTAINLY THAT'S HOW WE PERCEIVE SOUTHWESTERN BELL'S BEHAVIOR. THEY'RE HUNKERED DOWN, THEY'RE BIG AND THEY ARE TOUGH TO BUDGE.
I'M FROM MISSOURI AND I KNOW SOMETHING ABOUT MULES. MULES ARE NOT ONLY STUBBORN, THEY ARE INTELLIGENT. A HORSE WILL WORK OR RUN ITSELF TO DEATH. A MULE WON'T. IT GENERALLY KNOWS WHAT'S IN ITS SELF INTEREST.
THE SAME IS TRUE WITH SOUTHWESTERN BELL. IT KNOWS THAT THE LONGER IT HUNKERS DOWN, THE LONGER IT WILL BE ABLE TO KEEP COMPETITORS FROM GETTING INTO ITS LOCAL EXCHANGE MARKET. EVERY DAY SOUTHWESTERN BELL CAN STOP OR HINDER ITS COMPETITORS IS ANOTHER DAY IT CAN RETAIN THE LEVEL OF ITS MONOPOLY REVENUES.
GETTING SOUTHWESTERN BELL TO MOVE REQUIRES THE STICK (A TWO-BY-FOUR IF NECESSARY) OF SECTIONS 251 AND 252 OF THE ACT, AND THE CARROT OF SECTION 271. GIVEN THE POWERFUL ECONOMIC INCENTIVES SOUTHWESTERN BELL HAS TO MAINTAIN ITS BOTTLENECK POSITION, BOTH METHODS ARE ESSENTIAL.
THE BELL COMPANIES, AS WELL AS CLECS AND OTHER PROVIDERS, WILL DEPLOY BROADBAND SERVICES RAPIDLY
IF THERE IS ONE AREA WHERE THE BELL COMPANIES' BEHAVIOR IS NOT MULISH, IT'S IN THE DEPLOYMENT OF ADVANCED BROADBAND SERVICES. NOW I KNOW THEY SAY THEY NEED A SPECIAL SET OF RULES B OR EXEMPTION FROM EXISTING RULES B BEFORE MAKING AN INVESTMENT IN BROADBAND FACILITIES.
ACTUALLY, THE BELL COMPANIES ARE ALREADY MAKING THE INVESTMENT, AND AT A FAST PACE. THEY AND OTHER ILECS HAVE TO DEPLOY BROADBAND SERVICES QUICKLY OR THEY WILL BE BEATEN TO THE MARKETPLACE BY CLEC'S, CABLE COMPANIES AND OTHER SERVICE PROVIDERS. SOUTHWESTERN BELL TODAY IS AGGRESSIVELY MARKETING ITS DSL PRODUCT AND PRICING THE SERVICE AT SUCH LOW LEVELS THAT CLEC'S USING UNBUNDLED NETWORK ELEMENTS CANNOT MATCH, MUCH LESS BEAT, THE SOUTHWESTERN BELL PRICE. OTHER BELL COMPANIES AROUND THE COUNTRY ARE DOING THE SAME.
INDEED, IT IS THIS COMPETITIVE PRESSURE FROM THE CABLE INDUSTRY AND THE CLECS THAT HAS FORCED THE BELL COMPANIES IN SOME STATES TO FINALLY BEGIN MAKING GENUINE EFFORTS TO SATISFY SECTION 271 CONDITIONS SO THEY CAN ENTER THE IN-REGION INTERLATA MARKET. THEY WILL MOVE IN THAT DIRECTION BECAUSE, AND ONLY BECAUSE, THEY WANT TO GET INTO THE INTERLATA DATA MARKET AND KNOW THEY WILL NOT GET THAT CARROT UNLESS THEY OPEN THEIR MONOPOLY LOCAL EXCHANGE MARKETS TO COMPETITION.
THE RIGHT INCENTIVES
IF YOU HAD AN OPPORTUNITY TO REVIEW THE BIOGRAPHY I SUBMITTED, YOU MAY HAVE NOTICED MY INTEREST IN DEREGULATION. THIS INTEREST STEMS FROM MY GRADUATE SCHOOL DAYS AT THE UNIVERSITY OF CHICAGO WHERE I STUDIED UNDER PROFESSOR GEORGE J. STIGLER.
PROFESSOR STIGLER WAS THE 1982 WINNER OF THE NOBEL PRIZE IN ECONOMICS FOR HIS WORK ON THE ECONOMICS OF REGULATION. HIS WORK HELPED ESTABLISH THE PRINCIPLE THAT REGULATION OFTEN FAILS TO ACHIEVE THE PUBLIC POLICY GOALS THAT GIVE RISE TO THE REGULATION IN THE FIRST PLACE. INSTEAD, COMPETITION IS ALMOST ALWAYS MORE EFFECTIVE IN ACHIEVING THOSE SAME GOALS.
BUT COMPETITION CAN ONLY WORK WHEN THERE ARE NO BOTTLENECKS IN THE MARKETPLACE. MY FEAR IS THAT IF THE BELL COMPANIES ARE ALLOWED INTO THE LONG DISTANCE DATA MARKET BEFORE THEY OPEN THEIR LOCAL MARKETS, THEY WILL BE POSITIONED TO RE-ESTABLISH THEMSELVES AS MONOPOLY CARRIERS IN BOTH THE LOCAL AND LONG DISTANCE MARKETS. THE RESULT WOULD BE THAT WE WOULD HAVE TURNED BACK THE CLOCK TO THE PRE-AT&T DIVESTITURE DAYS.
THE CONGRESS SET ECONOMIC INCENTIVES IN PLACE IN THE 1996 ACT THAT WILL SOON LEAD TO A TRULY COMPETITIVE TELECOMMUNICATIONS MARKETPLACE. DE-REGULATION WILL FOLLOW IN DUE COURSE. I URGE YOU NOT TO TAMPER WITH THOSE INCENTIVES BY PREMATURELY ALLOWING THE BELL COMPANIES INTO THE INTERLATA DATA MARKET OR BY EXEMPTING THEM FROM THEIR OBLIGATION TO PROVIDE CRITICAL BOTTLENECK FACILITIES AND SERVICES TO CLEC'S.
THAT CONCLUDES MY REMARKS. THANK YOU FOR INVITING ME TO PARTICIPATE IN THIS HEARING.
END

LOAD-DATE: August 13, 1999

Document 277 of 383.


Search Terms: telecommunications act of 1996, House or Senate or Joint
To narrow your search, please enter a word or phrase: