Three Years Later: Real Telecom Competition
and Deregulation Thwarted by the FCC

by Roy M. Neel
President and CEO -- USTA

Creative and disciplined deregulation of private industry can be a positive force for change in American life. Three years ago, Congress and the White House held such a dramatic vision for competition and deregulation of our telecommunications economy.

Yet, the Telecommunications Act of 1996 will "celebrate" its third birthday to decidedly mixed reviews. It is clear that the bipartisan intent behind the Act -- to promote open and equal competition in all communications markets -- has not been achieved.

Three years have gone by -- a virtual industrial lifetime -- and still no deregulation in the fast changing telecom world. Lewis & Clark, "civil servants" under President Thomas Jefferson, walked from St. Louis to the Pacific Ocean (and back) in two years to prove overland travel to the West was feasible. NASA civil servants answered President Kennedy's call and in three years had taken theorems on a clipboard and transformed them into spaceflights.

American history is replete with visionaries who looked forward and not backward when government regulators embraced the future without clinging to restrictive and outdated ideas from the past.

Why, then, a full three years after passage of the Telecommunications Act of 1996, do consumers still lack the choice in telecom services they demand and deserve?

I'll give you two hints: One, it isn't the fault of the technology, or two, it isn't the fault of the Act itself. We supported then (and still do today) the central pro-consumer, pro- competition thrust and intent of the Act. USTA members, and other communications firms across the country, have the technical and personnel wherewithal to fulfill that vision and deliver those new products and choices today.

So, what's the problem?

Simply put, the FCC is unwittingly slowing competition by over-regulating the next century's communications market with an early 1980's mind set.

That is not what Congress intended, and it is not serving the best interests of the American communication customer.

The 1,200 member companies comprising USTA want to do what it takes to encourage fresh thinking. We call it our "Resolve to Solve." We intend to be part of the solution to delivering real competition to all customers nationwide.

Arguably, the Telecommunications Act has achieved half of its goal: the local phone market is wide open to competition. Sadly, it cannot be said that the rest of the communications marketplace is open to competition or consumer choice.

The new, so-called local competitors have decided it is only profitable to serve the most lucrative business and residential customers. Allowing local phone companies into the long distance market would go a long way toward correcting this imbalance.

Without some kind of meaningful update in FCC thinking, we risk further promoting a form of incomplete "competition" that risks leaving millions of American consumers behind. No one wants a nation of technological have's and have-nots. But there is a growing "Digital Divide" in this country and ill conceived FCC policies and out-of-date assumptions are part of the reason.

Ask citizens in the five state "No High Speed Internet Access Zone" out West why they cannot buy the same technology in use throughout the rest of the country. The short answer: U S WEST wants to supply the service in these states and has the technology to do so. But FCC regulations prevent it. Outdated regulation, and nothing else, is what stands between these citizens and high speed Internet access.

This is not what Congress or the President and Vice President intended when they passed and signed the Telecommunications Act of 1996.

Local phone companies want to be good corporate citizens in a thriving market with open, equal and "real" competition that benefits consumers with new products, services and provider choice. We need only look at the booming wireless market to see a model where less is more. Less regulation has meant more competition.

As we begin Year Four of the Telecom Act, I challenge the FCC and State regulators to apply some fresh thinking to promote full telecom competition. Perhaps if we can first agree that the current approach is not working, we'll have taken an important first step toward finding the approach that will work. Only then will consumers, wherever they live and work, all telecom providers, and U.S. taxpayers be the winners.