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For Whom the Bell InterLATA Tolls

Posted: 02/2000

The Letter

For Whom the Bell InterLATA Tolls

khalipic.gif (3634 bytes)Undoubtedly the biggest telecom news of 1999 was the
FCC’s late December OK to let Bell Atlantic (www.bell-atl.com)
into in-region long distance in New York state.

I can’t help thinking that this historic FCC (www.fcc.gov)
ruling came less for the merits of Bell Atlantic’s application than for the weight of
public and political pressure requiring proof that the Telecommunica-tions Act of 1996,
now nearly four years old, actually gives consumers the choices it promised.

In fact, FCC Chairman William Kennard says the "real story" is not about long
distance, but about opening up the local market for voice and broadband services. Well, he
is right about that.

Without the carrot of in-region long distance, it is highly unlikely there would be an
open local market–even to the paltry extent that it exists. Therein lies a primary
concern for competitors.

Once approved, the Bells’ incentives to continue to open up local markets wane.
Fines–one of the penalties for anticompetitive behavior–will do little to deter
deep-pocketed ILECs. The other penalties–forfeiture, suspension and revocation of the
approval–require enforcement action by the FCC the likes of which we’ve not seen.

Can you imagine what mayhem would ensue if 25 percent to 30 percent of New York’s
consumers–Bell Atlantic’s targeted long-distance market share–were suddenly with-out a
provider?

Who would they be PIC’d to? Who would PIC them?

This 271 approval is irrevocable–maybe not on paper, but in practice. And, it surely
has opened the floodgates. It will be exceedingly more difficult for the FCC to deny
additional applications by Bell Atlantic and its sister Bell companies after having
approved one. This is the benchmark case.

While competitors often have lauded Bell Atlantic for its efforts to open local markets
in comparison to its peers, the compliment is relative. The other Bells hardly are shining
examples of the Telecom Act at work. Even in Bell Atlantic territory, local competition is
limited.

The FCC says that 1.3 million residential and business lines in New York are served by
competitive carriers. What it doesn’t tell you is that Bell Atlantic serves the other 11.5
million.

khalisig.gif (653 bytes)
Khali Henderson
Editor-in-Chief


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