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Tauzin-Dingell and the Baby Bells Sing 'You and Me Against the CLEC World!'

Tauzin-Dingell and the Baby Bells Sing 'You and Me Against the CLEC World!'

You don't hear much about the Tauzin-Dingell Telecom Bill, unless you're in Washington, DC, or in the camp of either the CLECs (Competitive Local Exchange Carriers) who oppose it or the ILECs (Incumbent Local Exchange Carriers) who we might assume all but wrote it. But Tauzin-Dingell (now in the Senate) would allow the Baby Bells to keep their legacy networks and any of their new broadband infrastructure developments to themselves. It would gut the Telecom Reform Act (TRA) of 1996. It could raise prices on all telecom services; it could be the end of some CLECs. The Tauzin-Dingell Bill could set telecommunications quality, service, and price standards on a path toward those of 20 years ago.

What would passage of the Tauzin-Dingell Bill mean? According to the Bells and their proponents, the Tauzin-Dingell Bill is needed for the ILECs to compete with other types of broadband technologies. Telecom consultant Dr. Bo Denysyk, president and CEO of Global USA, Inc., spoke with us about his views and the views of those who are pro-Tauzin-Dingell.

According to Dr. Denysyk, the cable companies, satellite companies, and wireless broadband providers are all unregulated compared to the ILECs. These are the competition that ILECs are concerned about for broadband.

I know that the profit margin for DSL is low, having worked in the industry. If lowering their own costs by passing Tauzin-Dingell will enable them to reap more profits and give them incentive to move forward with broadband deployment, then they have a point. But they are after far more deregulation than the CLECs - and even the computing technology vendors - are willing to let them have without a fight.

The CLECs have the vendors with them, as well as those consumers who don't believe the broadband proliferation theory but rather that ILECs will further monopolize and drive up prices. The ILECs have their stockholders and those consumers who believe that broadband will spread like dandelions or mono (wildfire is too cliché) as a result of the bill, and that they will somehow benefit.

And the ILECs make a good argument. "To offer a fairly rapid expansion of broadband, which is necessary for the economy, you need competition. And the only real competition the cable folks will have is from the RBOCs (Regional Bell Operating Companies) that offer DSL," says Dr. Denysyk.

Though this argument sounds urgent, logical, and compelling, the Tauzin-Dingell Telecom Bill itself doesn't pan out to be much more than an effort by the Baby Bells (SBC, Verizon, BellSouth, and Qwest) to go back to their pre-1996 monopolistic reign. Perhaps they're trying to tell us that this is what they will need to compete with cable and thereby spur the economy.

You can't blame the Bells for trying. If I were a monopoly, I would jump at the chance to regain complete control. But I am not a Baby Bell; I'm a consumer. I'm a consumer who has seen the difference between pricing and service before and after the TRA. I want to keep the improved QoS and choice that I now have. The CLECs' existence has been helpful in maintaining the improvements the TRA brought about.

Because the choice is there, ILECs have to compete. Because they have to compete, we all get better service, lower cost, and more choice. It's like voting. You may not feel you're getting anywhere by voting, but give up the right to vote and see what happens! Passage of the Tauzin-Dingell Bill would be a vote against CLECs and a vote for higher prices and poorer service. CLECs should remain for the good they do us all, whether or not we are CLEC customers.

The Emperor's New Fatigues?
The bill finds itself dressed in some loosely draped, broadband camouflage. This includes the recognition of non-broadband services as being a part of broadband in order that those non-broadband services might be deregulated as well. For example, according to Tom Santaniello, public policies manager at CompTIA (Computing Technology Industry Association), "[The Tauzin-Dingell Bill] defines...broadband...as [being] as low as 128Kbps, which is still under a typical DSL line [speed]. That's considered broadband [in this bill]." It would be one thing if true broadband were going to be poured over the entire U.S. market like gravy over mashed potatoes as a result of this bill. The bill doesn't guarantee that nor does it promise that prices will stay down.

Without saying they want twisted copper pair deregulated, the Bells' bill asks for deregulation of technologies that pass over twisted copper pair; this sets the stage for twisted copper pair deregulation.

"...A network that carries packet-switched technology is considered broadband [in this bill]. So when we're talking broadband this is another fundamental problem I have with the bill; their definition is almost analog copper wire. So they are using it to deregulate on a very broad, broad basis," says Santaniello.

The last time I checked with the phone company, they couldn't guarantee anyone a signal above 14.4Kbps over twisted copper pair wire, even using a 56Kbps modem. Why? Because those legacy telephone lines, those twisted copper pairs, were made for analog voice calls, which only require 14.4Kbps. So, if I get 56Kbps with my modem, that's great. But if you or I expect any service directed at achieving more than 14.4Kbps for any reason, forget it.

The only logical conclusion from all this would be that the Bells now want us to believe that 14.4Kbps constitutes broadband. The bill would then be without cause or purpose. Following this logic, since we already have 14.4Kbps, we would already have broadband. Why do we need the Tauzin-Dingell Bill to give us what we already have? I'm speaking tongue in cheek here but the point is that many of the bill's fundamental points don't stand up to logical reasoning, particularly those sections that define broadband.

Implications of Tauzin-Dingell
Tauzin-Dingell would remove the ILECs obligation to share their networks with CLECs. They would be no freer to expand than they are now; they would simply have the prospect of taking more profits. The bill may also put some CLECs out of business. "They [ILECs] won't have to make unbundled network elements for high-speed services available, which will make it difficult for folks like the old NorthPoints, Covads, and Rhythms to compete with them," says Mark Schneider, a former senior legal advisor at the FCC and now an attorney with Sidley Austin Brown & Wood.

How Will This Affect Consumers?
Schneider continues: "They [ILECs] used to charge $49 a month for the service [DSL]. Then their rates started to come down when Covad, Rhythms, and NorthPoint were providing competitive services through UNEs (unbundled network elements). And now that those companies are either bought or [have] gone under, the prices are going back up. So I think that's a reflection of the fact that without unbundled network elements, prices and competition aren't stimulated." Passage of the bill will hurt consumers by raising prices.

Once upon a technological time (1984), a long-distance call was about 60¢/minute. There wasn't any selection in call type or billing type. Customer service was held at a premium. You had to lease your phone. Things have improved much since those days; now we have 5¢ calls and better service, and long distance is sometimes even cheaper than a local call. These are the results of permitting and fostering competition.

"Any bill in this country that will give more strength to monopoly is going to harm the consumers and the businesspeople that use those services. So I think...it's [Tauzin-Dingell] going to be denied in the Senate and I think that will be positive for Americans," says Bill Capraro, Jr., CEO of CIMCO Communications, Inc.

The bill trashes agreements made by the Bells back in 1996 - for instance, the 14-point checklist that the Telecom Reform Act established in 1996 to let CLECs into the market while the Bells anticipated the long-distance market.

Vendor members of CompTIA don't favor the bill either. When they sell and implement services, they get a better deal on needed connectivity and bandwidth because there is choice in the marketplace. With the passage of the bill, choice and low prices would be gone for them as well. They are very adamant that this will be the result of this bill passing into law.

More Controversy
When I started writing this story the CLECs started calling like crazy. They were all clear on their position.

"I am 100% opposed to the Tauzin-Dingell Bill...because it's anticompetitive in nature and it supports monopolies [not having] to oblige by the telecommunications act of 1996 and FCC regulations, which require them to open up their networks to competition so that we have more choice for the consumers and the business customers out there," says Capraro.

This camp has several beefs about the bill. The gist conglomerately is that the Baby Bells are using this bill to not only get back the freedoms they had pre-Telecom Reform Act, 1996, but also to expand their networks for broadband (and otherwise) without having to share any of the new networking nor the old inherited monopoly infrastructure.

That notwithstanding, some CLECs don't believe it has anything to do with broadband, just the Bells reclaiming lordship over their current networks and shutting CLECs out. "I don't think it has anything to do with that [reigniting broadband deployment] actually," says Capraro, "I believe that the ILECs have found that this whole strategy of bringing massive bandwidth to the homes and so forth really hasn't been that acceptable."

If this theory is true it really robs the ILECs of their claim to such a motivation for the bill. What else could they do with the proposed deregulation? Capraro suspects that the Bells are looking to overhaul their networks and move voice from the legacy networks, which have used circuit switching to send voice signals along the pipe, over to the state-of-the-art technology, which is packet switching, specifically VoIP (Voice over Internet Protocol).

Some voices surrounding this discussion say that although we may need better legislation concerning the CLECs and broadband, it's definitely not this legislation. According to Richard Nespola, president and CEO of TMNG, "TRA '96, I wouldn't scrap it but I certainly would do major reviews of what we've learned since '96. And the CLECs are certainly not without justification for getting their voices heard, and that's survival. I think candidly, Tauzin-Dingell would probably be very, very negative and almost the death knell for many of the CLECs who still survive [and] are still doing some good things.... I don't think the FCC or Congress should give any CLEC a subsidy. But I do think they have to create a level playing field. And that's the challenge, finding that fulcrum where things are balanced."

Boundaries
Everything has boundaries, even the open market. Want to hear an open market boundary? "Power corrupts, and absolute power corrupts absolutely." - Lord Acton Richard

There are others. Even if monopolies had no other competitor to keep them from absolute power, they would have their consumers, they would have what the market will bear, and they would have antitrust laws to contend with. In this case the Bells have competitors and consumers who know a good thing when they see one. Here's another saying: "Might makes right." And another: "130 million plus registered voters and their elected Senators can't be wrong." And I wonder what they'll say?

SIDEBAR
Special WBT Update
Tauzin and Hollings Can't Play House; Possible Sneak Play - Hand off to the House or Lateral to the FCC

Hollings welcomed Tauzin into the bosom of his Senate hearing on the telecom bill only to find out that outnumbering someone isn't the same as seeing eye to eye. Senator Hollings anticipates his rendition of the Tauzin-Dingell Telecom Bill, to which the Bells are expected to respond "tastes bad, less billing." In the meantime, a new recipe for Tauzin-Dingell may be in the works in the House. Just take 10 parts pork barrel and hide two parts Baby Bell deep in the middle and hope no one notices. Maybe they'll call it Piggyback Baby. And bringing to climax a rumor heard from the inception of this story, the FCC is circulating a rule, which, if passed, will accomplish most of what Tauzin-Dingell was meant to do in the first place.

I fear that the winds of affordable Internet and telecom, they may be a changin'. Do we get to vote on any of this? If I see any politician so much as give a favorable wink or nod to the proposed FCC rule, I'm gonna tell 'em straight how I feel.

More Stories By David Geer

David Geer is a contributing writer to WBT, a journalist, and a computer technician. He graduated from Lake Erie College in 1993 with a BA in psychology and has worked in the computer industry and in the media since 1998.

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