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Its a Great Time to Be Big!


I GOT A LIFT OUT OF PHONE+

Editor Khali Hendersons May editorial about politics, policy, megamergers and metal-eating giants. I especially appreciated her comment, Its good to be big right now, because Im the guy who made that remark to her. I believe Khali and I are kindred spirits in many respects, so I could not resist responding to her editorial.

I am not afraid of metal-eating giants and tend to shy away from activist government. For 10 years as a mayor and a city councilman, I practiced what I preached. (Dont worry, Im better now.) Khali makes some compelling points, however, when she muses about who is policing behemoths like AT&T Inc., which by any measure dominate national policy.

Today, for all practical purposes, regulators in the United States are asleep at the switch. While they slumber, big interests like AT&T, Exxon Mobil Corp., TXU Energy and others have been granted a license to pillage. I am not talking about collecting an extra dollar here and there, but gains as a result of actions that would have been considered obscene practices only a few years ago. For example:

Texas was the first state to deregulate electricity. The result two years later? Rates increased in this state by more than 50 percent.

  • How much did you pay for your last gasoline fill-up? $40? $60? More?
  • Natural gas has risen 50 percent at the wellhead in two years. Ditto for home heating oil.
  • The new bankruptcy reform law passed, courtesy of credit card and health care companies. They didnt see the tears in my daughters eyes when the minimum doubled on her credit cards while she was struggling with her electric and gas bill.
  • And while we are on the subject of big, just who owns the media in this country today and why arent more people in an uproar? When you dig, that answer is not a pleasant one either. What we really are seeing in the country today, to quote Khali again, is Media Ownership: The Sequel.
  • On an up note, according to the formula for the consumer price index (also changed just a few years ago), there is barely any inflation. Oh, pleeeease!

Now lets consider our business telecommunications. Have you tried signing up to get service from an AT&T competitor lately? There arent many left. Those who remain are peddling plain ordinary telephone service. There is no more high-capacity T1, T3, dark fiber, high-speed switching, mass-market switching, PRI interconnection, or anything of use to large businesses any more, to be had from a competitor reselling ILEC services. If someone wants those services, they usually have to suck it up and buy from AT&T, which convinced Congress these services are available in every corner drug store. AT&T couldnt wait to take advantage of all this competition in March 2006 when it raised PRI and T1 rates in Texas. That increase happened with only an informational notice (no public hearings) because AT&T convinced the Texas legislature and public utility commission a few years ago that these services were competitive, too.

I say, baloney. Even in the NFL cities where one may be lucky enough to have competing local carriers, it is still AT&T that owns the only wires or fibers to the end users. That access soon will be gone as well. There is no DSL available to resellers, and AT&T will not have to share any FTTH with competitors. And the poor saps left selling POTS in Texas now pay $28 per month, per line wholesale under new commercial agreements with AT&T. (This, coincidentally, is the same price a retail business line cost in 1997. Residential service at that time was about $11.05.) Whats wrong with this picture?

And AT&Ts sphere of influence is not limited to CLECs. Who owns most of the wireless companies and has put free access to the Internet in its cross hairs? I cant tell you its name so Ill give you the initials:AT&T.

My suggestion for anyone willing to grow a backbone and start taking control of this situation again is not re-regulation, but nationalization. Lets nationalize AT&T.

It has happened before, and besides, think of all the problems it would solve. There would be no more broadband haves and have-nots. All this talk from the ILECs about South Korea, Finland, or Tasmania having better fiber infrastructure than the United States would no longer be an issue, by golly. Like Kennedys pursuit of a man on the moon, well just set a goal and build broadband for everyone. No more worries about restricted access to the Internet or the World Wide Web becoming Big Eds personal playground. I mean, if we are going to go backward to a monopoly again, why not do it all the way?

Deregulated monopolies and oligopolies dont work. For proof, just take a look at your gas, electric, cable, credit card, natural gas, health care and phone bills. So, lets use AT&T as the model and then nationalize all the rest of em while we are at it.

I realize this policy proposal has about as much of a chance of flying today as the likelihood of Congressman Joe Barton and John Dingle joining hands and singing Kumbaya on the Capitol steps. But just as the pendulum has swung to the point where regulators cant control these metal-eating giants anymore, it can and will swing the other way. A few years and a few administrations from now, who knows what will happen? Anything is possible. You can say you read it here first.

Leo A. Wrobel is telecom consultant with TelLAWCom Labs Inc. He is the author of several books and holds degrees in business and public policy, telecommunications systems technology and electronics systems technology. He can be reached at leoprivate@tellawcomlabs.com.

Links
TelLAWCom Labs Inc. www.tellawcomlabs.com

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