Summary:

Having followed the telecom industry for a long time, I have observed two facts of life: when their livelihood is threatened the Baby Bells react with amazing alacrity. Secondly FCC is slowly losing control over the whole competition thing. Take for instance its recently issued series […]

Having followed the telecom industry for a long time, I have observed two facts of life: when their livelihood is threatened the Baby Bells react with amazing alacrity. Secondly FCC is slowly losing control over the whole competition thing. Take for instance its recently issued series of Interim Rules governing UNE pricing, rules to be used until a final set are decided upon later this year or in early 2005. Allan Tumolillo, COO of Probe Financial Associates and one of the smartest people in telecom business I know, thinks that “FCC has sufficiently antagonized all parties to the UNE dispute that the primary beneficiaries may be the regulatory bar practitioners.” Why such harsh words Allan?

The Solicitor General declined to appeal a Circuit Court opinion which favored the Bells and eventually tipped the scales against AT&T and MCI remaining in the traditional consumer long distance and local markets. “Verizon and Qwest have already announced their intention to have the interim rules scuttled and they have filed a motion in the DC Appeals Court. This issue will get mired in election year politics and the timing of Michael Powell’s departure from the FCC.” He thinks FCC is delaying the inevitable. Time to move on, perhaps. UNE may be on its last legs. And so is competition. FCC Chairman Powell champions broadband over power lines, believes that IP video is around the corner and VoIP will be enough to beat the Bells. Utopian, but not steeped in reality. Since 1996 Telecom Act – an apt example of bipartisan disaster – the telecom regulation has become the biggest problem for United States in the broadband/telecom sweepstakes. FCC has become schizophrenic.

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By Om Malik

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