The pout on the face of Michael Powell, chairman of the Federal Communications Commission, could mean only one thing: Consumers were the winners in an FCC decision to encourage local phone competition. Powell wanted to change the rules in favor of the local Bell companies, but a majority of his fellow commissioners refused to go along. That means residents in Florida and other states could finally see some price relief for local phone service.
Even in defeat, Powell wouldn't let go. He all but invited Verizon and the other local Bells to sue the government over the rules. Such suits, of course, would only delay competition and cost phone customers more.
Overall, the ruling was a mixed bag for consumers. While upholding competition for local calls, the FCC made it easier for the Bells to tighten their grip on broadband Internet service over phone lines. That means the price of such Internet service is likely to increase in the future.
Yet the ruling on local phone service was a clear victory for consumers. Over the past decade, competition in long-distance and wireless service has led to lower prices, but few Floridians have seen savings on their local phone bills. The Telecommunications Act of 1996 attempted to encourage competition with the local Bells, who have done everything they can to resist it. Just as the marketplace was beginning to respond, Verizon and the others turned to Powell to shut down their rivals.
The local phone companies own the lines to nearly every house and business, as well as the switching equipment that routes calls. In other words, without government intervention, they hold a monopoly on local telephone service. The 1996 law required the Bells to lease their lines and switches to competitors at reasonable rates set by state regulators. (In Florida, that is Public Service Commission.) State control of rates was important to success and was upheld in the latest FCC ruling.
Powell argued that Verizon and the others should be able to charge competitors whatever they wanted, and that local phone competition would come from cable TV operators rather than other phone companies. While that may or may not happen in the future, his position would have given consumers no relief in the meantime.
Competition is just beginning to flourish in Florida, thanks to favorable rulings by the PSC. Two years ago, 8 percent of local phone customers chose a competitor to the Bells, and that rose to 13 percent last year. Most of the choices are for business customers, however, and the law won't be successful until more residential customers get in on the savings.
At least a majority of FCC members have given competition a chance to flourish.
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