Exhume the 1996 Act

Reader says that the Telecommunications Act of 1996 has failed to bring competition to the cities. In sharp contrast, competition is alive and well in Wi-Fi.

[Response to Should Telecom Regulations Be Scrapped? from January 11, 2002.]

[January 17, 2002]

Jim,

The MAN bottleneck is a clear-cut deterrent to economic growth in this country. With most competitive xSPs dead or on life-support machines, on what are you basing your claim of, "While certainly not perfect, the Telecom Act has opened up the communications industry in a way that fosters vigorous competition, keeps prices relatively low, and allows entrepreneurs to flourish in a new marketplace?"

Competition in the WAN and wireless markets is quite evident. Pricing is down 70 to 99 percent in many segments, while market segmentation (read, the number of applications available to the end-user) is quite extensive. What evidence can you point to in the MAN? Prices are high. Choice is limited. The reality is that the Telecom Act was a well-intentioned farce, in which the ILECs were able to play the various competitive factions (CLECs and IXCs) against each other.

You might instead focus on the fact that vertical integration does not foster innovation and new services, either among the ILECs or cable companies. Current regulatory structure fosters this vertical integration. The future for the telecom sector will most likely mirror that of the data processing world over the past 2 decades; namely that structural separation is accepted by (or forced on) managements, the capital markets and regulators.

Regards,

Michael Elling
Principal, SSC Global Advisory
www.Telstack.com