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Guest Editorial: Who’s in Charge Here?

Posted: 09/1997

Guest Editorial: Who’s in Charge Here?

The debate surrounding the ongoing delay in opening local
telecommunications markets to competition is beginning to
intensify. Here’s the latest:

Fact one: Frustration over the slower-than-expected pace for
the roll-out of local service competition has caused Federal
Communications Commission Chair Reed Hundt to announce plans to
appoint a task force to determine what the problems are and what
can be done about them.

Fact two: You can automatically assume that this task force
will be immediately assaulted by phalanxes of lawyers and
lobbyists attempting to define for them what it is they are
supposed to be determining and exactly how it should be
characterized.

Finger pointing to place blame for the lack of progress has
practically become an Olympic sport. Each of the two sides in the
debate the LECs and their would-be local competitors claim that
the other side is deliberately delaying the advent of
competition. To what end, I would ask? So that all these
companies can invest millions of dollars into such expensive
items as systems, plant, training, etc. as they are currently and
just leave it all stranded?

The heat is obviously being turned up, most likely as a result
of some disturbing developments involving some of the companies
who were assumed to be the strongest potential competitors for
local service. First, there was AT&T flirting with SBC in
purported merger discussions. Whether truthful or not, this
action was perceived by many as an indication that AT&T was
willing to throw in the towel as a go-it-alone local competitor.

Second, MCI announced that it expects to lose at least $800
million this year, principally as a result of problems related to
competing in local service. Lawyers and lobbyists speaking on
behalf of the LEC community quickly claimed that the real reasons
for the loss are "bad management" and "foot
dragging." Such comments are as ridiculous as they are
unhelpful. MCI, the company that invented competition for the
telecommunications industry, is not known for bad management. To
believe these LEC spokesmen, MCI is deliberately setting itself
up to take massive bottom-line hits in order to preserve its long
distance market share and/or keep the RBOCs out of long distance.
Does anyone really believe that? No right-minded business person
could advocate such a stratagem.

On the other hand, why would the LECs want to forestall
competition? Most LECs realize that the longer the delay in
establishing an open and level playing field, the more difficult
it will be for them to compete in long distance and the more
market share loss they will suffer in local service. A strategy
based on deliberately delaying competition only makes sense if
the RBOCs honestly believe that they can retain their monopoly in
local service and also enter long distance. No right-minded
business person would come to that conclusion by him or herself;
they would have to be led to it by the aforementioned lawyers and
lobbyists.

So the basic problem today has to be that right-minded
business people are not making the decisions in this industry
anymore the lawyers are, and that creates a scary scenario.
Lawyers controlling the decision- making process of operations
people. Lawyers controlling the decision- making process of
marketing and sales personnel. Lawyers controlling the decision-
making process of public relations professionals. The true
businessmen have allowed themselves to be elbowed out of the
process. No wonder things are a mess!

Back in the early ’80s, Charles Brown, then chair of the board
of AT&T, stopped listening to the lawyers, decided to break
out of the legal morass that AT&T was ensconced in and
subsequently opened the gates to competition in at least some
elements of the telecommunications markets. That action took
incredible courage and vision. When are the business people in
our industry going to start thinking the same way?

Ernest B. Kelly III
President
Telecommunications Resellers Association

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