No room for compromise

"UNE-P is not real competition," Whitacre said. "It is simply a subsidy for companies like WorldCom and AT&T that is totally dependent on companies like SBC being able and willing to make all the capital investment and absorb all the profit margin pressure. True competition invests in facilities. True competition innovates and provides a differentiated product to customers. True competition cares about service. UNE-P is simply false competition. It relies on subsidies, invests nothing, builds nothing and ultimately hurts everyone's ability to raise capital and invest."

On the next day, SBC was fined $6 million for violating the agreement it signed with the FCC when it acquired Ameritech.

Powell went on record in support of that finding: "Such unlawful, anticompetitive behavior is unacceptable," he said. "Instead of sharing, as the law requires, SBC withheld and litigated, forcing competitors to expend valuable time and resources."

SBC disagreed. "We believe that the Commission has mistakenly interpreted not only the letter, but also the intent of the shared transport merger condition," said James Smith, SBC senior vice president.

H. Russell Frisby, Jr., Competitive Telecommunications Association (CompTel) president, commented "The fine represents less than a month of the CEO's salary. SBC's actions cost consumers well over $6 million and allowed the company to retain more than $6 million of business. The problem is that the FCC doesn't have sufficient authority to levy a fine that will be meaningful."

Teasing out the issues
In public debate, those favoring unfettering the ILECs rarely talk about anticompetitive behavior, but they do occasionally acknowledge it. (Powell himself noted the problem in his October 2, 2002 statement when he said, "only through facilities-based competition can a competitor lessen its dependency on an intransigent incumbent, who if committed to frustrate entry has a thousand ways to do so in small, imperceptible ways.")

When commissioner Martin responded to Powell, on December 12, 2002, [.doc] at the 20th Annual PLI/FCBA Telecom Conference in Washington, D.C., he did not raise the issue of anticompetitive behavior but did set the terms of the debate.

He suggested that ILECs compete with satellite, wireless, and cable providers, and should be declared "non-dominant" which would allow them to not publish tarriffs (tarriffs describe clearly the prices and conditions attached to services, and help ensure that everyone gets the same deal from a monopoly). He said that any ILEC providing fiber to the home (FTTH) should not be required to open its fiber network to the competition. He further asserted that every CLEC does not need direct access to the ILEC's network. Instead, in any location where there are several wholesalers that already have access to the ILEC's network, the ILEC should not be required to give access to more companies, because they need only purchase access from the wholesalers who are already there.

Martin further commented that the states, not the federal government, should determine whether or not there is competition. He said, "I believe that the States should be implementing our standard by making the factual determination regarding the existence of alternative facilities-based providers and whether, and to what extent, impairment exists with respect to the ability of new entrants to access the market."