Can Technology Save Competition in Telecommunications?

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Can Technology Save Competition in
Telecommunications?

• John W. Mayo
• Georgetown University
• mayoj_at_georgetown.edu
• [phone]

Phoenix Center December 16, 2004
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The Optimism of 1996

• Opportunities abound for both industry and
  consumers
• Commissioner Susan Ness
• Catapult this country right into the Information
  Age
• Commissioner Rachelle Chong
• I can now confidently predict that the
  Telecommunications Act of 1996 will usher in an
  era of communications innovations that will
  shortly make our present arrangements as
  antiquated as the Guttenberg Press.
• Senator Howard Baker

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The Vision of the Post-Telecommunications Act
Competition
Post-Divestiture
Pre-divestiture
Post-Act
Long lines
ATT
MCI
IXC
MCI
LD BOC
LD
BOC
CLEC
BOC
BOC
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The Reality of 2004

• Since Congress passed the Telecommunications
  Act of 1996,the RBOCs have had three primary
  policy objectives 1) long-distance entry in
  every state 2) elimination of unbundling
  requirements and, 3) elimination of competitive
  entry strategies. We believe the Bells have
  largely achieved these goals. they face
  shrinking competition. Source Legg-Mason,
  September 15, 2004

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Bankrupt and Discontinued Telephony Entrants
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Can Technology Save Competition in
Telecommunications

• Verizon Communications Inc. (VZ.N) and Qwest
  Communications International Inc. (Q.N) said on
  Thursday they had seen large drops in new
  residential telephone lines grabbed by
  competitors since ATT Corp. (T.N) announced a
  retreat from residential service in July.
• ATT's decision stemmed from changes in those FCC
  rules that it said would lead to cost increases.
  Industry executives and analysts say ATT's move
  and similar strategies by other Baby Bell
  competitors might allow the Bells to recapture
  most of the 17 million local lines that
  competitors now lease under federal rules,
  boosting earnings. (emphasis added)
• Reuters -September 9, 2004

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Can Technology Save Competition in
Telecommunications? The Other Reality

• Telecommunications markets are all perfectly
  contestable and ILECs face robust competition
  from
• Cable, Wireless, Power Lines, Internet (VOIP)
• Need to ask serious questions
• Do Wireless and Landline compete in the same
  market?
• Are Power companies actually providing telephony?
• Can Cable offerings in California limit market
  power of Verizon in Washington DC?
• Does the broadband platform limit the extent of
  competition from VOIP?
• Should public policy be content with a duopoly
  platform for as far as the eye can see?

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If we knew what we were doing, it wouldnt be
called research, would it? Albert Einstein