SOAP BOX: Rural Rollout of Advanced Services Requires Realistic Grasp of Digital Divide

Posted: 07/2002

Is The Battle Over?

By Walter G. Blackwell

Feb. 7, 1996, the date the Telecommunications Act was signed into law seems like such a long time ago. And in many ways it is. Look around your company and ponder the changes that have occurred during the past six-plus years. And as you look beyond your company, out towards our industry as a whole, the changes probably are more striking. We've experienced one of the greatest economic boom times in recent memory and the most severe economic downturn our industry has ever seen. Mergers, acquisitions, bankruptcies; we've experienced them all. And the seemingly endless uncertainty in the regulatory environment can cause one's head to spin. What are telecommunications service providers, particularly the small to mid-sized providers, many of whom mortgaged their personal assets to follow the promise of the '96 Act, to do?

That promise was for full and unfettered competition in the local markets and subsequent entry by the RBOCs into the interLATA long-distance market. The cornerstone of the Act for ensuring the realization of this promise is the "271" process, whereby the incumbents were given a guide, known as the 14-point checklist, to follow in order to demonstrate they had opened their markets to local competition. This checklist spells out how the RBOCs are to share their networks and open their monopoly markets to competition. And if they follow the checklist they will be allowed into the interLATA long-distance market. Seems simple enough. And to some extent it was.

Bell Atlantic (now Verizon Communications Inc. won the first approval, in December 1999 in New York. Since then, the FCC has approved long-distance entry in 13 states, with approvals expected in late June for Maine and New Jersey. The most recent approvals were in Georgia and Louisiana. (The latter was received after BellSouth Corp.'s third attempt to do so.) Furthermore, state regulators in South Carolina and Kentucky already have endorsed BellSouth's application, so the FCC should be receiving the applications soon, and there is no reason to believe these too won't be approved.

The 271 debate continues, six years after passage of the Act, as the remaining states undertake or complete their proceedings and determine whether or not the RBOCs have met the checklist requirements. Undoubtedly, thousands upon thousands of documents will be produced on both sides of the debate. But at some point one must ask, "at what cost?" The competitive industry has spent millions of dollars in state and federal proceedings to persuade regulators the RBOCs had not opened their markets to local competition and, therefore, were not legally eligible to enter the interLATA long-distance market. Arguments that were and are justified, but at what cost and how effective have we been? Without doubt, we were effective in demonstrating the early 271 submissions were, at the very least, premature. Did anyone really believe the local markets in Michigan or South Carolina truly were open to competition and Ameritech & BellSouth had met the 14-point checklist back in early 1997? Apparently Ameritech and BellSouth believed they had, but fortunately the regulators found otherwise, based in no small part on our evidence to the contrary.

The effectiveness of the competitive industry's efforts were evident in the withdrawal and denial of a number of 271 applications, including Louisiana which had been denied twice and withdrawn once before it was approved in May. Some may continue to argue the final approval itself was premature but ultimately we must accept the outcome and learn to do business in the post-271 environment.

This in no way implies we should abandon our efforts to ensure compliance with the 14-point checklist. To the contrary, we must remain vigilant in providing the necessary data to justify a delay or denial of an application. Regulators cannot make reasoned and informed decisions in a vacuum or by hearing from only one side.

However, at this point, after more than six years and a following a string of approvals, perhaps now is the time for the industry to pay more attention to learning how to compete effectively in the rapidly evolving post-271 landscape and forge partnerships with the RBOCs.

Perhaps now is the time to consider alternatives to regulatory debates and proceedings in order to chart our competitive destiny. Even the fiercest competitors can find common ground when they believe their individual interests can be served. Is there common ground, tilled and harvested between the behemoth monopolists and the agile new entrant? I believe so. But it won't be discovered unless and until each side sits down in a business forum, not a legal setting, and discuss the options, face-to-face. Now many cynics in the crowd will roll their eyes and bemoan a history of broken promises and anticompetitive behavior, and all that may very well be true. But is it worth the effort? Even though our continued efforts may be successful in delaying approvals, it is inevitable that the RBOCs will receive approval in all states. Therefore, we should be looking to do business and partnering with them.

The regulators role is not to determine who wins or loses. They have broader public policy considerations. Ultimately, it is good business practices and shrewd negotiating skills that will separate the winners from the losers. It is incumbent upon ASCENT, as a trade association, to assist its members in gaining the skills needed to emerge as winners on what may very well be an unfair regulatory playing field. However, we must and will remain vigilant in our regulatory oversight and involvement, but it will not be at the exclusion of other strategies to succeed in the marketplace.

For those who can't wean themselves completely from regulatory skirmishes, rest assured plenty of battles lay ahead, but I suggest they be a bit more judicious in the battles chosen. In fact, the FCC is reviewing important regulatory issues. Probably the most critical is the "Triennial Review" with the future availability of local switching, and therefore UNE-P hanging in the balance. Post-271 compliance issues also are being addressed and will continue to be in the future.

As the regulatory landscape changes so does the competitive landscape. Are the small to mid-sized service providers equipped to handle both and still succeed? The answer is they can be, and that's where ASCENT steps in. The entrepreneurial spirit of our members leads me to believe they will find a way to stay in business regardless of the changes. It is up to ASCENT, as an industry trade association to help them "Start, Stay & Succeed" in their business pursuits. With ASCENT's renewed focus on business and industry education, networking and yes, regulatory and legislative affairs, we intend on doing just that.

Walter G. Blackwell is president of the Association of Communications Enterprises. He can be reached at wblackwell@ascent.org.