A Silver Lining to the Financial Meltdown?

By Khali Henderson

I was dumbfounded as I listened to Rep. Chip Pickering’s keynote address at the COMPTEL PLUS event this week in Florida. The Congressman, who is ending 12 years as a Republican representative from Mississippi, admitted the Republican Administration, Congress and FCC turned its back on the competitive telecommunications industry.

Of course, this isn’t a newsflash, but it’s a surprising admission from a Republican. In case you missed it, here’s what he said:

”I think you began to see after the ‘96 Act, a change that occurred around 2001, 2002, 2003, 2004, when both the leadership of the committee, the leadership of the commission and the administration went from a policy of advocating and promoting competition to instead advocating and promoting and having policies ... of consolidation, concentration, elimination of competition. I can say as a Republican, I am not proud of that change in policy and emphasis because I think it is dangerous, and I think it’s against the core beliefs and values from Teddy Roosevelt, who wanted to break up trust so that we would have a more diverse economy. And a more diverse economy creates the greatest economy and the greatest strength, not a concentrated economy.

“...The vision that you had in ‘96 has not always been sustained in Congress or by the FCC. But a new day is coming and that is good news. ... I do think we are about to see -- with either [new] administration -- positive leadership that will give us new opportunities to reclaim and restore the vision that started in 1996.”

I was further taken aback by his suggestion that somehow the competitive industry capitalize on the current economic crisis to prove the strength of competitive markets. He said:

“I do think the financial services collapse gives you an opportunity to say there is such a thing as a good regulation that enhances and promotes free markets and it does not intrude or encroach or distort markets. ...If we lose that [in telecommunications] we can have some of the same problems that we have had in the financial services markets. ...It is the examples of competition in Internet and investment that gave our economy the boost it got in the 1990s. We need to return to open policies, interconnected policies, innovation and investment policies in this sector.”

It’s unfortunate that we have had to see the monumental failure of our financial markets in order to drive the point home. Was nobody in power paying attention when the CLEC market was left in tatters following the dot-com crash and funds dried up? Was nobody watching as the Bells began to reconstitute themselves? Was nobody watching as the ILECs gained in-region long-distance authority while hardly meeting the checklist requirements, including opening local markets? Was nobody listening when former FCC Chairman Michael Powell said telco versus cable was adequate competition? Is nobody watching while the ILECs retire copper loops?

I could go on, but you get my point.

Apparently, it takes a global catastrophe for a wake-up call. The early warnings on the financial crisis were sounded in 2005. So, I guess that means those “crybabies” didn’t yell “no fair” loud enough either.

I am not sure any of us in the telecoms space would feel to happy about using this low point in our history to say: “I told you so.” But I certainly hope that Pickering is right that there is a chance to stop the concentration of power in telecom and to give competitors the chance they’ve been cheated. But that won’t turn back the clock all the way, offering little consolation to the competitors that were collateral damage of the policies over the past seven years.