The Fallacies and Realities of the Broadband Debate Myth #1: The Telecom Act did not apply to data. Data is a new phenomenon that shouldn’t be regulated.

In fact, Congress didn’t pass “The Voice Act;” it passed the Telecommunications Act, which includes data as well as voice. Already, over half of all traffic on the network is data, and data will grow to over 80% of all traffic by 2001.¹ In the last mile of the network, both voice and data funnel through a bottleneck controlled by the RBOC monopolies. The RBOCs are only going to unclench their bottleneck control if they have an incentive: namely, entry into the long distance market. That’s why it is so important to create local competition before granting long distance entry. Letting the RBOCs into long distance for data would remove their incentive to open the bottleneck and effectively would mean giving up on local competition for both voice and data services, denying consumers any choice of vendor.

Myth #2: There’s a critical shortage of Internet backbone facilities, especially in rural states. Granting a data exemption will alleviate the growing “digital divide.”

In fact, there’s no shortage of Internet backbone capacity. More than 40 Internet backbone providers are in business today in the U.S. alone, and six major new national fiber-optic networks will come on line during the next two years, representing an $18 billion investment.² Companies are investing in rural areas, too: Montana has more high-speed infrastructure per capita than any other state in the nation,³ and the chairman of Maine’s Public Utilities Commission says reports of Maine being “disconnected” are just plain wrong.⁴ However, if the RBOCs succeed in perpetuating fears about the “digital divide,” they will be able to squash local competition under the guise of helping rural America. These same monopolies, meanwhile, are backing out of their rural areas. US West has sold off almost 600 rural exchanges since 1994, and GTE is in the process of selling off 1.6 million rural access lines. The bottom line: granting the RBOCs an InterLATA exemption will not help rural customers. If anything, killing local competition will make the “digital divide” even worse.

Myth #3: The RBOCs need a special incentive to deploy advanced services.

In fact, competition is the right incentive. Local exchange competitors, wireless and satellite carriers, and cable operators are leading the way in broadband deployment. The RBOCs are responding by aggressively deploying digital subscriber line (DSL) technology. Over 45 million RBOC and GTE lines will be equipped to provide DSL service by the end of 1999. SBC will reach 77 million customers with DSL by end of 2002.⁵ At the same time that deployment goals are increasing, prices are dropping. Bell Atlantic has dropped its DSL price twice, SBC has cut its residential DSL price by $40, and US West is offering DSL for as little as $19.95 per month. Encouraging competition clearly pays off.

Conclusion: The real bottleneck for voice and data service is the monopoly local telephone network. If lawmakers give up and leave the local markets to the monopolies, investment in local competitors will dry up and the deployment of new technologies will grind to a halt. Don’t let the monopolies slip through a loophole. Competition for local customers is the key to broadband success.

1. Telcordia Technologies, "Next Generation Networks: A Practical View of Network Evolution," http://www.telcordia.com/newsroom/knowledgebase/
2. Inter@ctive Week, "Building a Better Backbone – And Business Plan," 9/6/1999.
3. Montana Standard, "State Disputes 'Disconnected' Status," 8/16/1999.
4. Bangor Daily News, "Maine Information Highway Well-Paved," 9/2/1999.
5. "SBC Launches $6 Billion Initiative to Transform It into America’s Largest Single Broadband Provider" http://webcast.sbc.com/media/news/release.doc , 10/18/99.