The Bells, The Bells, Only The Bells

"Where's the competition?" asks James Glassman of Tech Central Station. Almost five years after the Telecommunications Act of 1996, which was supposed to open up competition for the "last mile," megacorporations like Verizon and SBC still have a stranglehold and their would-be competition is gasping for air. What went wrong in the local loop? And what's to come?

Comments

Sprint is doing an end-run around baby Bells

[Mtgman]

[disclaimer, I am an employee of Sprint]

The article basically says that since the Baby Bells (SBC and Verizon) own the physical "last mile" lines, they are keeping a stranglehold on the possibilities of competition for local service. These companies are still getting to enter the long-distance service buisness, which they weren't supposed to do until they opened up their lines to competitors, by sucking up to politicians.

How is Sprint facing this? Wireless. Screw the physical infrastructure of the last-mile lines. Sprint basically gave the baby Bells the finger and started building digital wireless towers everywhere they can. Pretty soon you'll be able to buy a wireless broadband modem and hit a PCS tower with a digital signal without touching a bit of Bell property. Since the wires are all owned by someone who won't share and has no interest in letting Sprint in, Sprint is doing what has been proven to work in markets where the physical infrastructure doesn't exist. Make it wireless.

Steven

Distrust

[karzan]

Around here I think it's mainly a question of trust. Here in California, they recently deregulated the power companies so that independent power companies could exist. Lots of power companies have sprung up, many cheaper than the standard ones, many completely based on environmentally friendly power. Still, lots of people stick with the old big one because they don't trust these littler companies in case something goes wrong.

I think it's the same with phone companies. People don't want the hassle of having to deal with some tiny local company run by a couple of college students that could go out of business in a week and where the maintenance and support are questionable. They know and trust the companies that are already around. The vast majority of people are going to stick with the big, old companies purely out of trust issues, IMO.

How RBOC's stifle competion...

[Floody]

Here in BellSouth territory, it's common knowledge that Bell does everything in their power to derail competition.

For example, they have managed to get a stranglehold on DSL. How did they do this? Despite the fact that competitive providers have DSLAMs at the COs, Bell still has to go out and handle any "last-mile" issues. When they are required to do this for their DSL competition, it's all too common for them to be too short staffed to handle the job. Delay after delay after delay sets in. Four to six weeks pass, and the end customer STILL doesn't have DSL.

Oddly enough, should the customer get fed up and elect to choose BellSouth's "Fast Access" DSL service, a technician is somehow immediately available and dispatched. We've even had reports of Bell techs, dispatched by Covad/Netrail, telling customers that "there is a problem with your line, it's going to take a few weeks to fix. However, if you want BellSouth DSL, there are other things we can do to get it working immediately." Of course, this is NOT Bell's official policy, and they'll deny it to the ends of the earth if you call them on it.

The whole thing is a joke. The baby bells will do anything in their power to hang on to their monopolies, including breaking the law.

Irrelevant

[Kiss the Blade]

The landline companies are unimportant. They have to compete with wireless, mobiles, satellite etc etc

The simple fact is that landlines won't exist in twenty years at all. Nowadays mobility is the key; landlines are clearly archaic. My generation her in Britain doesn't use land-lines at all - everyone has a mobile. They are cheaper and offer higher quality. When 3G liscences arrive, the competition will be annihilated.

I predict that companies such as Vodafone and Erikkson will control the infosphere in the future. They are the ones we should be watching, not 20th century corps like Verizon.

KTB:Lover, Poet, Artiste, Aesthete, Programmer.

Cherrypicking, as usual

[squiggleslash]

Britain deregulated telecoms in the mid-eighties (all telecoms, not just long distance), at first trying to get competition by promoting a second competitor and giving that competitor advantages (Mercury), and in the early nineties, when that clearly wasn't working, opening everything up and encouraging participation by the cable companies.

What happened? Cherry picking. The cost of putting together even a new long distance network, let alone a local network which - even given access to an existing local loop - is a complex and expensive proposition to get involved in, is astronomical. Competitors, with the exception of the cable companies, exclusively targetted big businesses and left the consumer market to token long distance services and that was it.

The assumption the US legislature made was that all telephone companies will try to serve the whole market, or see all parts of the market as having the potential for dramatic profits. That assumption, frankly, is a load of tosh.

AT&T got a monopoly in the early part of the 20th century because of a recognition on both sides that providing universal service was only an advantage to a telephone company if it owned the entire market. AT&T accepted regulation as the price for this. But while "universal service" is useful to a competitive telephone company, it is a burden to provide, and nobody wants to do it. As a result, competitive telecoms is focussed pretty much exclusively on the bodies that pay the most, ignoring the residential and small business markets.

Legislators made the mistake of thinking that the only barrier to entry in the residential market was the absense of an open local loop. But this was untrue even in 1996 - cable companies have always had the capability to operate telephone networks over their loops, and many American cable companies have experience from running exactly those types of system in the UK.

William Kennard, FCC chair, once introduced Britain's OFTEL boss of the time as proving competitive, deregulated, telecoms could work. OFTEL, of course, prove no such thing, and most of the move forward to de-regulated telephony has been the result of ideological bunk, rather than because anyone has a clear, sensible, way of making it work.

How do you fix it? There are several options. You could forget the crap and go back to heavy regulation. You could, on the other hand, remove the local loop from the telephone companies. This forces the creation of a market for the telephone companies to serve. Whether this is enough to encourage telephone companies to dip their toes in the water of residential telephony is open to question, but it's a better situation than what we have now.

What you don't do is just assume that competition will automatically develop if you "open" a market. Competition will only ever appear in markets where there is a great deal of money to be made, and the residential telephony business is not where that's at.
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