More on the FCC

Here's a follow up about the FCC from Altercation, but this time it's a telecom attorney weighing in:

Name: Witheld
Comments:
I've been a telecommunications lawyer with twenty years experience both at the FCC and in front of state regulatory commissions. Because I represent entities with pending cases there today, please do not publish my name. That said, I heartily endorse Ben Scott's critique of Chairman Michael Powell's thoroughly anti-consumer tenure. Michael Powell is the worst kind of regulator. He arrogantly assumes he knows everything, and therefore is completely close-minded to any legitimate input. The most notable example you barely mention, which is Powell's strident opposition to competition for residential and small business consumers. You might ask why this is the case, when Powell lards his long, pompous speeches with fulsome paeans to consumers? Mr. Powell single-handledly has eliminated the requirement that large incumbent phone companies like Bell South, SBC and Verizon, share their bottleneck facilities with competitors. These facilities are called "UNE-P", and is the only mechanism in place allowing competition. Powell's legacy of eliminating these facilities has yet to be quantified, but already competition for these consumers is evaporating. How can this occur? Simple. Powell is allowing the incumbents to charge "market" prices for these facilities, effectively in March, 2006. What are these prices like? Not surprisingly, they exceed the retail prices charged by the same incumbent providers. This is why the nation's largest competitive providers of residential service, MCI and AT&T, are quickly exiting the market and being purchased by Verizon/Qwest and SBC for chump change. But you ask, doesn't Powell say internet phone service and cell phones will provide the competition once MCI and AT&T (and dozens of other companies) exit the market? He does, but don't believe it. Very few people have abandoned their local phone service and totally rely on cell phones. The only people that do are the kinds of folks that did not have phone service to begin with (students, transients ,etc.). What about Internet phone service (called in industry parlance "VoIP")? This is a margin product today, and is frankly not getting too much penetration. One only need consider AT&T's utter failure in that market (far less than 100,000 customers over six months after entering and marketing the service) to see this is not going anywhere. What about cable TV companies, another competitor cited by Powell? Nationwide, cable providers service 3% of consumers, and are quite slowly rolling out services. The sum, as you will see over the next year, is Powell's legacy of remonopolization take hold.

Is Martin more pro-consumer? In reality, he is. Martin originally voted against Powell's scheme to eliminate competition. However, after the Bell Companies put on a full court lobbying blitz at the White House, Martin was forced to follow Powell's lead. Absent a White House that were not in cahoots with the large monopoly providers, I suspect Martin would do a good job at the FCC. Alas, we know this is not true. The future of competition in America is therefore bleak, since the Bush Administration and its appointees only look out for the large special interests. Get ready for more consolidation and less competition over the next four years.

Not much good news to report these days.