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Document 274 of 383.

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JUNE 24, 1999, THURSDAY

SECTION: IN THE NEWS

LENGTH: 2266 words

HEADLINE: PREPARED STATEMENT OF
MS. MARY BETH VITALE
PRESIDENT AND COO
RMI.NET
BEFORE THE HOUSE COMMERCE COMMITTEE
TELECOMMUNICATIONS, TRADE AND CONSUMER PROTECTION SUBCOMMITTEE

BODY:

Good morning Chairman Tauzin, Ranking Member Markey and Members of the Subcommittee. My name is Mary Beth Vitale and I am President and Chief Operating Officer of Denver-based RMI.NET. On behalf of RMI.NET and the Competitive Telecommunications Association or CompTel, I appreciate the opportunity to appear before the Subcommittee today to help illuminate the competitive issues related to the deployment of advanced data services. These are critical issues. Virtually all of the services RMI.NET provides to small and medium-sized businesses and consumer end users are dependent on our ability to acquire and interconnect to high-speed or advanced data communications services.
I would like to tell you about the role of RMI.NET and other competitors in the industry, then make three points about the deployment of broadband in this country. First, the competitive industry is doing a good job of deploying advanced data services, even to high-cost rural areas. The business plans of RMI.NET and many others like us are proof of that. Second, claims by the Regional Bell Operating Companies or RBOCs that deployment of advanced services cannot be fully realized without special regulatory relief are overblown. As a former US West employee, I have heard all of their justifications for requesting data relief. I find those justifications disingenuous and aimed more at expanding their market than at bringing relief to consumers. It is, in fact, possible to foster the development of advanced data services in today=s environment. In fact, spurred by competitors, the RBOCs and GTE are deploying new data services without special regulatory exemptions. Just as competition has pushed the RBOCs and GTE to finally deploy advanced data services to densely populated areas, competition will push them to deploy to more rural areas. Third, legislation that alters the competitive landscape created by the Telecommunications Act of 1996 would actually be destructive, as it would undermine the position of competitors and the positive force they exert on incumbents. Ironically, legislative proposals to exempt the RBOCs and GTE would remove competitors from the equation, thus eliminating the pressure on incumbents to deploy and endangering the price competition and choice that are critical to consumer welfare. Allowing the RBOCs special interLATA relief now, when they have demonstrated their antagonism toward competition, will kill the promising -- but nascent -- competition that exists in the market for advanced data services. RMI.NET and CompTel would strongly oppose any such proposals.
RMI.NET provides convergent e-business and packet-based communications solutions for small and mid-sized companies. At the most basic level, RMI.NET has been offering dedicated and dial-up Internet access services to businesses and consumers since 1994. Currently, we provide access in 90 of the nation=s top 100 market areas via a combination of points of presence that we own ourselves or lease from others. RMI.NET recently purchased DataXchange Network, the sixth largest national Internet backbone provider, giving us the capability to provide access at speeds up to DS-3 in New York, Chicago, Atlanta, Washington, Dallas, San Francisco and Los Angeles. DataXchange=s network is based on a dual OC-3 fiber optic ring, and interconnects via peering arrangements with all significant backbone providers at multiple network access points. We also provide website hosting, and competitive local exchange, long distance, and Internet protocol voice service.
Over the years, our Internet Service Provider, or ISP, business has expanded through both internal growth and acquisitions, many of which are focused on small markets and rural areas -- the very areas that are at the center of the drive to deploy bandwidth. RMI.NET recently acquired Dave=s World, an ISP headquartered in Bloomington, Illinois, which serves a number of downstate Illinois communities, including Peoria. We have also added Internet Connect, based in Salt Lake City, Utah. Internet Connect serves the small mountainous communities of Heber, Morgan and Huntsville, Utah, in addition to the relatively larger communities of Salt Lake City, Ogden and Provo. Within our home state of Colorado, we offer Colorado Mountain Net, headquartered in Steamboat Springs, which brings service to scattered communities in northwestern Colorado. The Internet access business is particularly competitive; there are more than 5,000 ISPs in the U.S. Although we are the largest locally based ISP in Denver, we face competition there, and in every major market we serve, from national, regional and local ISPs. Even in the smallest cities and towns, there are almost always several ISPs vying for consumers= accounts. It is estimated that upwards of 90 percent of the U.S. population has local dial-up access to more than one ISP.
The fact that RMI.NET and other competitive companies are quickly and efficiently deploying advanced data services to smaller and even rural communities makes evident the fallacy of RBOC and GTE claims that consumers can only realize the full benefits of these services if the Telecommunications Act is altered to provide special incentives for them. One hallmark of RMI.NET and other competitive ISPs is our extensive use of broadband transmission capacity to provide our service offerings. The sources and availability of broadband capacity do vary somewhat from route to route and city to city. As a general rule, the longer competition has existed in a market, the more plentiful the supply of bandwidth and the lower the cost. On interstate and interLATA routes, where competition was first authorized, there is ample broadband capacity available. Ultra-high speed digital links capable of carrying the vast quantities of voice and data traffic that the American information economy generates are readily available from the major long distance carriers (AT&T, Sprint, GTE and MCI WorldCom) as well as from several newer national network providers, such as Qwest, Frontier and Level 3.
Within the major metropolitan areas, the sources of broadband capacity began to multiply with the emergence of competitive access providers; in the three years since the barriers to local competition were removed by the Telecommunications Act, the pace has accelerated and fiber rings have been, or are being, deployed in first, second and third tier markets throughout the country. Just look at the markets we already serve in Western states. And look at other CompTel members like ITC DeltaCom, a competitive local exchange carrier and backbone provider offering services in the Louisiana communities of Lafayetteake Charles, Monroe, Shreveport, and West Monroe, as well as in Baton Rouge and New Orleans. RMI.NET and ITC DeltaCom are representative of the many competitors deploying advanced services in large and small communities across the country. Over time, we fully expect that this process will continue, at an accelerated pace, as companies expand their operations in smaller cities and towns to attract workers and to address the quality of life issues facing many employees. In light of present and future deployment by competitors, RBOC claims that consumers will not enjoy widespread access to advanced data services do not recognize the true status of the market. The competitive market is, in fact, addressing the broadband infrastructure needs of the nation.
Second, although slow to react as usual, the RBOCs nonetheless are deploying broadband B and without regulatory relief. From my experience with US West I can tell you that it was because of competition, not in spite of it, that US West has finally deployed broadband services in its service area. The benefits to consumers are clear, as more widespread, better, cheaper services have become available.
We are already beginning to see the effects of competition in the broadband access market. An example can be found in the contrast between two of our ISP markets, Denver, Colorado and Bloomington, Illinois.

Within the past few weeks, a start-up company called Rhythms NetConnections Inc. announced the availability of high speed data services (using DSL technology) in several Western markets, including Denver. US West, which had initiated a similar service offering in Denver and other markets nearly a year earlier, almost simultaneously announced a nearly fifty percent reduction in its basic DSL rate for residential subscribers. In Bloomington, Illinois, there is still only one facilities-based DSL provider (the incumbent LEC, GTE), and prices remain substantially higher than in those markets where competition exists.
US West and other RBOCs, unfortunately, have done little to improve the competitive landscape. Although US West currently offers advanced serv 5.5 million households in 39 cities in its region, it has earned an extremely poor record over the years in terms of delivering on its promised data services to competitive providers. For example, RMI.NET has been waiting months for US West to install DS-3 lines in areas where there is not yet an alternative supplier. US West is capable, from a regulatory and a business point of view, of providing this service now, but refuses to do so.
This brings me to my third and final point. The robust and growing competition that now exists in the data market would be a thing of the past if the ability of competitors to access broadband data facilities were compromised as a result of legislative proposals now under consideration. While RMI.NET and other competitors provide some of our own networks, and to a large extent have been successful in deploying services to both rural and urban areas, the fact remains that the RBOCs and GTE control vast local networks that cannot readily be duplicated. Thus, we must rely on incumbents for access to these networks, just as competitive local exchange carriers must rely on access to voice networks. The very existence of a competitive market for advanced data services is made possible only by the unbundling, resale discount and interconnection requirements of the Telecommunications Act. Particularly in more rural areas, competitors need access not just to loops, but also to the other elements of incumbent networks in order to make network extension feasible. For example, in the absence of unbundled network elements or resale (both denied under pending RBOC proposals) competitors would be forced to Acollocate their own equipment in incumbent LEC end offices -- more than 23,000 of them nationwide -- and, in many cases, remote terminals, which number in the hundreds of thousands. This will cripple broadband competition in rural America where thin population densities will make it economically infeasible for more than one local provider to install the necessary equipment. Clearly, fortifying the incumbent=s advantage is not the answer. Instead, we must ease the way for competitors to push the incumbents to serve new areas. If the basic pro-competitive requirements of the Telecommunications Act are obliterated through legislative fiat, the competitive market will die as quickly as it was born.
In addition to threatening the very elements of the Telecommunications Act that competitors rely on to provide communications services, some proposals would strip the FCC and the state public utility commissions of their authority to regulate the provision of broadband data services. These proposals would slow competition and ultimately disadvantage consumers by giving incumbents the green light to favor their own services. If freed from existing legal obligations to refrain from unreasonable discrimination, incumbents would doubtless give priority service to their direct customers. Companies such as ours, that purchase broadband services from the incumbents (and others, where it is available), could face even greater delays and potentially higher costs, particularly over the short term. Consumers, and competition, would suffer.
Finally, I would like to highlight that there is a loophole in the current data relief proposals. These proposals fail to recognize that data networks could be used to provide prohibited long distance voice traffic as well. It is an error to assume that voice and data can be treated differently. Today, and for more than a decade, both circuit- switched voice traffic on the public switched telephone network and packet-switched data traffic on the network of networks which comprise the Internet, are transformed into the ones and zeros characteristic of a modern digital network. This was true when the Telecommunications Act was enacted, and it remains true today. As a practical matter, there is no way to limit the breadth of these proposals to relieve the RBOCs of their obligations under the Act. Proposals to allow RBOCs to provide interLATA data services should be rejected because they may lead to untimely relief from the market opening provisions of the Telecommunications Act that are prerequisite to RBOC provision of interLATA voice traffic.
The Telecommunications Act is working, as evidenced by the explosive growth of the Internet and e-commerce. Hundreds of billions of dollars have been invested in companies that have been created, or that have diversified their business activities, to take advantage of opportunities provided by the Act. Preservation of the current framework, including the unbundling and resale requirements, is essential to the continued growth of this vital sector of the U.S. economy.
Thank you.

END

LOAD-DATE: June 26, 1999

Document 274 of 383.


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