The Death of Competition


Bells to consumers: You are really screwed now, because we are the only game in town.

Regional phone companies have used all sorts of dirty tactics, lobbying and spending millions of dollars in a blatant attempt to kill competition in the local phone business. Today, AT&T announced that it was going to get out of the local and long distance business in seven states, and more could follow. The Wall Street Journal adds that “MCI and other rivals could follow AT&T’s lead.”

“We foresee a future with less choice for consumers,” said David Dorman, chairman and chief executive of AT&T. “Competitive alternatives are simply not available today for most Americans.” AT&T said it expects the Bells to start raising rates as early as November.

“This is the beginning of the end of local telephone competition. What will follow is a future with fewer choices and higher prices for consumers. Anyone who said that the decision would not be a problem for the competing telephone companies was simply trying to fool American consumers. This shows the brutal effects of not preserving the UNE-Platform by regulatory commissions setting reasonable prices to gain access to the phone system,” write Mark Cooper, director of research for the Consumer Federation of America. With incumbent local phone companies (ILECs) still having approximately 84 percent of the total local lines and 86 percent of residential lines, the FCC should be encouraging more competition, not less, contends Cooper.

What do I really think about this whole UNE-P mess?

Well let me not mince words: FCC is a lackey of the current administration, and has basically been compromised by free spending Bells. As an organization representing the American people, it has failed to live-up to its task, and has instead become a political tool! Someone called for scrapping of FCC a few days ago, and now I have to agree. Having said that, let me point out a couple of things. Firstly, the Democrats are going to turn this into a political issue. AT&T wants that, because it knows right now it does not have any friends left in FCC and basically wants this to get down and dirty. I am pretty sure they are going to be fanning those politicial flames. From the Bells perspective, I can promise you one thing: that fiber to the home crap they keep talking about – well not in my lifetime.



Ok – I know this is going to get a lot of flames, but I wanted to present a counter-argument to Om: I agree that there will be less competition in the short term – but it really wasn’t competition – it was more like allowing Wendy’s to make burgers inside a McDonald’s on their stove. Short term it will hurt the consumer’s choice, but longer term, it will encourage Bells to invest in infrastructure (regardless of whether or not this is a good, sound investment). What’s the incentive for anyone to upgrade their infrastructure if they have to then give it out to the competition? The reality, from my point of view, is that real competition is only beginning now – and it will be in the form of cable and wireless. Looking at the drops in landlines, this seems to happening quite quickly. But to your point Om – it’s definitely longer term. Am I surprised that both are using cash to buy the party that will back their point of view? Hardly! Comments welcome – rip that argument up!


hey guys thanks for the comments. well i agree voip is the competiton but right now UNE-P is going to be only competition. it will a while before VoIP actually becomes the dot bomb!

Charlie Sierra

After reading your post, I’ll only share this tidbit if you promise not to vapor-lock on me.

Verizon is paying the “nominal” fee of $3m to sponsor the Republican convention in NYC. It seems that convention sponsorships are a legal loophole that allows both parties to collect large donations, cough, cough.


Rob Myles

a little hard on the fcc, i think the supreme court and the white house understant that it really is pointless, considering that voip is the real threat

Rob Myles

i would imagine that this will end up back in the suprem court anyway, this is the nail in the coffin for a company like ztel, now they have nohting, evaported, they are at the mercy of the bells, so when they sue, where is going to go? i would be selling shares in ztel right now if i had any……

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