Where's There's Smoke ... Part I Open Eyes & Ears Tell a Story, If We Listen and Watch

It's not naive either to state the need for these preliminary conditions for a dialogue. Rather, it's an acknowledgment of the depth of our problems, a statement of reality, to say at some point - and that point has long since arrived:

"As a nation we have to begin to address the climate of political influence in our society and its impact on 1) general principles for governmental regulation and oversight; 2) the relationship between government officials and telecom companies, their points of view, the resolution of issues and the impact on the structure of the industry; and 3) the actions of government officials who regulate and oversee these companies and the decisions they make."

To continue to sweep these issues under the rug while trying to move forward with solutions is to deny reality and live in a fantasy land. It's real, folks, Denial ain't just a river in Egypt, and something can and should be done about it. To begin a discussion on policy without clearing the air first and hauling these issues out into the open is to try to run a marathon while dragging a bag of bricks behind. You can do it, but it's not the recommended way, and it has a predictable outcome. You will fall behind all the other less encumbered runners in the race.

When one doesn't know where to begin, sometimes a place to start is just to jump in and offer impressions that are logical and reflect Truth as one sees it. I'll start with the argument I have heard from the Incumbents who want to keep on working incrementally.

The Argument for Continuing the Status Quo

The message I've heard from Big Telecom (and Cable) companies that currently provide the bulk of broadband services, when speaking to government regulators and lawmakers at all levels, at least remains consistent:

1. "We ask you to take care of our industry issues first, by relaxing regulations and relieving price controls, and we will then invest that extra money in broadband infrastructure and provide the services the nation needs. Trust us. It's the only efficient way that you will get what you want."
2. "Repeat #1 until you no longer agree with us and give us what we ask for."

But the facts don't support such arguments; indeed, regulators and lawmakers have done just what the industry has asked numerous times and we have not got the world-class fiber network they sought, nor competition, nor even robust wireless broadband. Instead, Cable broadband and DSL over existing legacy networks are offered in limited areas at limited speeds and at high enough prices by a handful of companies so that only parts of the nation can access and/or afford broadband that does not compare with world-class standards. Verizon plans Fiber to the Home in limited urban areas over a lengthy deployment schedule, and AT&T plans Fiber to the Curb over an even more tardy schedule.

It doesn't take a lot of digging to figure out this situation - the message is apparent with the barest of research and a modicum of common sense.

The dots are there to connect, if one only looks. This and subsequent posts are anything but an exhaustive reporting of the issues. Rather, consider them a snapshot to make the point that just a preliminary connecting of some dots I've seen over just the past few weeks makes a strong case for the most casual, but logical observer, if not a biased industry insider with a motive to continue the status quo.

The Deregulation of Telecommunications has not led to a Competitive Market, despite or because of efforts of regulators and lawmakers; it has led instead to the consolidation of market power and the entrenchment of a large corporate presence in telecommunications with very strong influence over government at all levels.

Consider Dots Number One-Five. Thirty-five years of effort led to a transfer of power and assets, from government to business.

1972. "It's broken, we need to do something." The US Justice Department files suit against AT&T to address issues of monopoly and changing technology.
1984. "We've reached a compromise - we will break up the monopoly into smaller monopolies and a larger company that we will let into the computer business." The Justice Department finally reaches a settlement with the national telecom monopoly, AT&T aka "Ma Bell." See the Bell System Divestiture Decision.
1996. "We will deregulate the Regional Bell Operating Companies (RBOCs) and bring about competition." See the Telecommunications Act of 1996.
1997. We'll create a fund (broad-based user fee/tax) to ensure that all areas of society have access to telecommunications in the absence of monopoly regulation, to be administered by a select few large companies." See Universal Service Fund.
2005. "We will separate "information services" from "telecommunication services," placing them outside of traditional regulation, and we will let information network owners, both Cable and DSL, close their networks to competitors - deny access." See Pass the Brand X Please.

In successive waves, various state and federal agencies, regulatory bodies, courts, and legislatures have sought to move our nation from a regulated monopoly model to a competitive market model, and at each step, their efforts have been stymied by a commercial industry intent on retaining control and making the most money for its shareholders. Can't blame them, they are playing to win. And all along, watchdogs, critics, and government leaders themselves have voiced misgivings and expressed outrage, to no avail. In the end, like a good movie or story moving from Act One to Act Three, we've ended up about where we've started, with some interesting action along the way.

"It Won't Work, Don't Do It ... Oh, Sh^&*t!"

The Telecommunication Competition and Deregulation Act of 1995 is the worst bill to come along in 60 years. While deregulation of media has been slowly taking place for 20 years, this bill would open a whole new era in monopolistic control of mass media. Al Gore claims that the House and Senate versions of the bill represent a giveaway to America's largest corporations: "Instead of being a commitment to the future, these bills--especially the House bill--represent a contract with a hundred companies. Instead of promoting investment and competition, it promotes mergers and concentration of power."

The bill would allow a single owner to control television stations covering 35 percent of all American homes, plus an unlimited number of radio stations in every community across the nation. It would allow this same owner to purchase newspapers and the cable system in every community, which could result in a single company dominating all news and information available to one-third of the nation. It would allow the Bell Operating Companies to buy into long-distance services before they have real competition--which almost guarantees increased rates. It would let cable and telephone companies buy out each other while removing the power of the states to regulate rates and services; a monopoly would exist in many communities and cable and telephone rates could soar. As Representative John Conyers (D., Mich.), former chairman of the House Government Operations Committee, told his colleagues on the House floor, "For American consumers, this is one big sucker punch." It will "cost our constituents, the consumers, a bundle." 1995: I'm Telling You, It Won't Work

"Whatever It Is You Were Trying To Do, I Don't Think It's Working."

In summary, the very slow implementation of the 1996 Act has resulted in a series of mergers in the telecommunications industry. The intent of the 1996 Act was to promote competition and the public interest. It will be a significant failure of the US political, legal, and regulatory systems if the interests of entrenched monopolists rather than the public interest as expressed by the US Congress dictate the future of the US telecommunications sector. Unfortunately, the lack of progress in the implementation of the 1996 Act during the last two years has been a victory for the incumbent monopolists rather than of the US Congress. If the present trend continues, the intend of the 1996 Act to open all telecommunications markets to competition will not become a reality. 1998: It's Not Working

"Man, Did Anyone See What Just Happened - How Did They Get Away With That?"

It is on the state level where one can find the greatest excesses of the Telecommunications Act. All 50 U.S. states and the District of Columbia contracted with their local telecommunication utilities for the build-out of fiber and hybrid fiber-coax networks intended to bring bidirectional digital video service to millions of homes by the year 2000. The Telecom Act set the mandate but, as it works with phone companies, the details were left to the states. Fifty-one plans were laid and 51 plans failed.

Note that these applications were all prior to the Telecommunications Act of 1996 being passed, so they were covered under the prior 1934 Act. And by 1995 most of these applications had been withdrawn by the telephone companies, though the FCC oddly continued to act as though the applications were still valid. 2007: Not Only Did It Not Work, We Got Taken to the Cleaners

Over and over again, large telecommunication and media network (cable) companies ask for relief, they bargain with the government, they strike deals, and then they do it all over again, devoid of consequences. Lather, Rinse, Repeat.

And so here we are as 2007 winds down, nearly back to where we were in 1972, except that now the infrastructure that was viewed as a national treasure paid for by ratepayers by way of a regulated monopoly is now viewed as a sunk cost network asset owned by a set of private companies who can use it as they see fit, charge for it as they see fit, use it to thwart competition, and yet, still count on various tools of government support, whether it be funds or market protection, when they ask for it. And, we are no closer to having a national wired and wireless network to support high-speed data at state-of-the-art levels, with universal access and universal service pricing.

Some deal. "You're doing a heckuva job, Brownie."