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Bottlenecks 101

Posted: 07/2001

The Letter

Bottlenecks 101

Now that there’s an oilman in the White House, we’re all learning that the root cause of our immediate energy problems isn’t so much lack of core supplies as it is the bottleneck in energy distribution. Capacity in the nationwide power line and pipe grids wasn’t expanded fast enough over the past decade to accommodate surging demand, and, under deregulation of the utilities industry, the incentives were stacked in favor of lower, not higher capacity.

Sound familiar? Maybe we need a telecom titan in the White House–where are you when we need you Bill McGowan?–or at least someone whose ability to recognize economy-threatening bottlenecks extends across more than one industry. By all appearances, the current occupant does not feel the same degree of alarm over the local access bottleneck now squeezing the life out of the telecommunications boom that he expresses over the energy bottleneck. But he should.

In fact, if newly appointed FCC chairman William Powell’s early signals are any indication, we might be witnessing a situation where federal enforcement of the Telecommunications Act of 1996 serves to undercut even more than it already has the ability of competitors to provide broadband services and, in so doing, to force incumbents to do the same. Just as things desperately need to get better, they’re threatening to get worse. That’s
… the crossroads we’ve reached, as reported by Washington, D.C. Bureau Chief Kim Sunderland in
"Red, White & Still
Blue
," and as reiterated with respect to the forces arrayed against implementation of the pro-competitive UNE-P (Unbundled Network Element Platform) rules in
"Storm Protection."

As
"Red, White & Still
Blue
" suggests, looking to a Democratic-controlled Senate to mount resistance to the anti-competitive tide is to risk complacency at a moment when it seems that only an all-out lobbying push at state and federal levels, with pursuit of court options as well, will be sufficient to make a difference. Where the Democrats are concerned, it’s worth remembering that former Vice President Al Gore entered office as the Clinton Administration’s point man on telecom, vowing in a dramatic Hollywood appearance in early ’93 to break the control of telecom and cable monopolies over the future of electronic commerce and then retreating into near silence as his ideas met the anticipated resistance. Two years later this reporter remembers engaging an aide to South Carolina democratic Senator Fritz Hollings, then, and now suddenly again, chairman of the key Commerce Committee, in a discussion of how things were progressing on the telecom deregulation initiative and getting a response to the effect that, “We see no need for any kind of bill at this point. Nobody is even thinking about it.”

Miraculously, not long after that conversation, market forces and the lobbying clout of major long-distance and other players finally reached a flash point of effectiveness, forcing a reluctant administration to put muscle behind its pro-competition rhetoric. The indifference in the Senate suddenly was overcome, resulting in passage of the sadly flawed Telecom Act a year later.

The message from that experience is that if the forces for competition are to make headway in a climate that is far more averse than it was in ’96, they will have to mount a two-pronged attack of unprecedented proportions, geared on the one hand toward public awareness and on the other toward directly influencing decision makers.

On the PR side, if an energy bottleneck is cause for alarm, the ongoing access bottleneck now threatening a new-economy engine that has made possible balanced budgets and big tax cuts should be cause for panic. The risk to the current administration of public embarrassment over failure to recognize that fact should be made obvious through a drumbeat of outrage and concern, such as we’ve seen expressed lately in The Wall Street Journal, The New York Times and other media outlets.

But the PR tack only will work if it’s accompanied by a full-court press on the lobbying and regulatory-enforcement fronts. Based on what we’ve seen over the past decade, it will take drastic, concerted action to move politicians in either camp to take on powerful incumbents whose wiliness in thwarting the effectiveness of the ’96 act has made clear what the forces of competition are up against.

Fred Dawson
Editor in Chief

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