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[July 27, 2005]

Ensign's Telecom Bill Protects VoIP but Also Monopolies

I like the idea of having more competition and less regulation. My concern is that we have cable lines and phone lines built over the decades from a monopoly position in the market.

By RICH TEHRANI
TMCnet Technology Analysis Columnist

Here are some links to the new telecom bill:

Senator Ensign Telecom Bill

Senator Ensign Telecom Bill Talking Points

I haven’t had a chance to digest it fully, but so far the important points of this bill are that it protects VoIP calls. It claims to help the market by taking away arbitrary and historical regulations that arbitrarily hamstring one competitive technology over another.


It says its goal is to encourage all companies to invest and compete vigorously to deliver innovative, quality services to consumers.

It claims it may bring $634 billion in GDP growth and 212,000 jobs in five years.

I like the idea of having more competition and less regulation. My concern is that we have cable lines and phone lines built over the decades from a monopoly position in the market. These lines have always been regulated to some degree and since 1996 have been shared with others at low rates.

Now these companies don’t have to share their lines if they don’t want. Sure, cable and phone companies will be competing vigorously. One day we may see widespread deployment of BPL and WiMAX as well. My concern is for the small company that wants to provide internet services via DSL at better rates by providing better service. It is a given that LECs and cable companies have poor service and are slow to install lines for customers.

The best analogy I can think of to the current state of the telecom market is the airline market where American and Delta as entrenched monopoly carriers were used to resting on their laurels. Their service wasn’t great. They didn’t really have to do anything to make a living.

Once new carriers came into the market the airline world was turned upside down. Consumers have more choices and are happier when they fly. It took brand new companies with brand new models to change this market.

The point is that it is easier to launch an airline than it is to drag copper or fiber to every curb or home in the nation. How will the upstart internet companies that can really shake up the market come to be?

Sure, VoIP is one answer and certainly Vonage is doing a bang-up job competing with cable companies and LECs. But cable and phone companies have the ability to bundle services because they own the lines. They can bundle at such low prices that VoIP providers are squeezed out.

They are using lines that were built via monopoly businesses to compete in a new world of Internet service. I reiterate that this bill isn’t fair to small ISPs and CLECs who want to provide competitive DSL rates and better service levels.

Lines that were built by government sanctioned monopolies should be shared. Giving these lines back to companies is unfair to the competitive landscape and consumers. The Telecom Act of 1996 addressed these issues and they are now being swept under the rug. This causes me great concern.

Please also see: U.S. Sen. John Ensign Releases Telecom Act Rewrite

As a matter of disclosure, I am a shareholder in a cable company, a CLEC and a number of other telecommunications companies.

-----

Rich Tehrani is President and Editor in Chief at TMC.

 

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