More competition or less? It depends on whom you ask.
- By William Jackson
- Jun 22, 2004
CHICAGO'A recent federal court decision that effectively eliminated Federal Communications Commission rules on unbundling local phone access is either a good thing or a bad thing, ensuring either more competition or less competition.
Edward Whitacre, CEO of SBC Communications Inc. of San Antonio thinks it is a good thing. In his keynote address opening the SuperComm trade show today, he said the Bush administration's decision earlier this month not to appeal the decision will unleash a round of investment in new technology by incumbent telecom companies.
To prove it, he announced a $6 billion plan to run fiber-optic cable to new residential and business premises over the next six years.
Under the Telecommunications Reform Act of 1996, FCC rules required local telecom companies to offer competitors access to its local infrastructure at bargain rates. The idea was to break up local phone service monopolies and give competitors a chance to offer services without having to invest in extensive infrastructure of their own.
Competitors like this, of course. Incumbent local exchange carriers hated it, saying it gave an unfair advantage to new technologies offered by cable service providers, who often operate as monopolies. The results have been mixed.
Whitacre blamed the federal regulatory environment for much of the telecom industry's hardships over the last four years.
'It is safe to say these rules contributed to thousands of lost jobs and billions of dollars in lost value,' he said.
Whitacre said that with the economy rebounding, there is a pent-up demand for alternatives to cable in accessing digital services, and that the future of telecom is in IP.
'There is a limit to being a phone company, no matter how large,' he said. To avoid those limits, SBC is expanding its service offerings. It is partnering with Microsoft Corp. to trial an interactive TV service over the carrier's fiber network.
The SBC program, Fiber to the Neighborhood, will deliver 15 to 20Mbps to nodes within new residential and business developments in its territory. The connections can be used for Internet access, television and other digital services in addition to traditional voice telephone service.
'It will set the stage for full competition against cable,' Whitacre said.
On the other side of the equation, Whitacre said the new rules would not mean drastic changes for competitive local service providers using its local loop for access, at least in the short run. SBC has no plans to increase rates for loop access or high-capacity transport through the end of the year, he said.
William Jackson is a Maryland-based freelance writer.