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FCC hung up on failing telecom deregulation effort


© St. Petersburg Times, published May 23, 2001

Which line would you believe?

Which line would you believe?

The check is in the mail.

You always come out ahead in Vegas.

Telecommunications deregulation helps consumers.

These days, the first two sayings are more credible than the third.

Five years after federal law changed to inject competition into the telecommunications business, darn little has changed for the residential customer.

Where are all those benefits promoted when Congress decided to deregulate the telecommunications industry in 1996?

Sure, technology helped introduce new wireless services. But most consumers still can't pick a basic telephone provider other than the monopoly that's always handled local service. And prices for many telecommunications services are rising -- not dropping, as might be expected with competition.

Look at telecom giant Verizon (our former GTE), which still controls the vast bulk of the Tampa Bay area's phone market.

The company is raising the price for high-speed Internet access by tacking on a new $200 setup charge for new consumers interested in its lowest $39.95 monthly fee.

Verizon also says it wants to hike the price it can charge customers for local listings via 411.

And state by state, Verizon is phasing in a price increase by nearly a third for its national 411 information service.

A 411 call for a Verizon-supplied number outside a customer's local area will jump from 95 cents to $1.25, a 32 percent climb -- and still a bargain considering the alternatives. AT&T already bumped its price for national information service from $1.49 to $1.99 (its "00" service remains $1.49). And WorldCom and Sprint raised their similar services from $1.40 to $1.99.

Federal regulators insist all is well with their deregulatory scheme.

Federal Communications Commission data this week show that competitors of Verizon and three other large regional phone companies nearly doubled their share of the nation's local phone-service market last year.

The FCC says so-called competitive local-exchange carriers, or CLECs, which emerged since deregulation to compete with the Baby Bells, controlled 16.4-million local lines, or 8 percent of the total market, at the end of 2000.

A year earlier, these young CLECs controlled a mere 4.4 percent of the market.

Let's reword the FCC's happy spin on these statistics.

In five-plus years of deregulation, new players have gained access to less than 10 percent of the nation's local phone lines. That means the entrenched Baby Bells, which include Verizon, continue to dominate by controlling more than 90 percent of the local phone lines.

Gee, at that rate of change, we might have meaningful competition in -- oh, let's be optimistic -- 20 years?

The FCC's new chairman, Michael Powell (son of Secretary of State Colin Powell), says it is unfair to criticize the lack of telecommunications deregulation after only five years.

"The notion that 100 years of developed . . . infrastructures were going to be eviscerated in five years is a fantastically naive expectation," Powell told a Washington conference. "Why assume that we've failed?"

Some industry heavyweights, notably WorldCom executive and Internet pioneer Vint Cerf, suggest the numbers really show the Baby Bell residential service monopolies are alive and well in most parts of the country (including Florida).

If the FCC's Powell urges patience, it's too late for a rising number of telecom companies.

CLECs, those upstart companies that were supposed to underprice and out-service the lumbering Baby Bells, are failing at a rapid pace.

On Monday, a prominent CLEC called Teligent filed for bankruptcy. Teligent's stock had fallen 98 percent over the past year.

This month, the Tampa-founded CLEC called 2nd Century Communications shut its doors. Other CLECs, including Winstar Communications, Northpoint Communications and Tampa's AirVata buckled as the once-generous capital markets became reluctant to provide financing to money-losing upstarts.

Even Tampa's Intermedia Communications, a high-flying CLEC for years, eventually ran out of funds and is being acquired by WorldCom. Last week, Intermedia said it lost almost a quarter of a billion dollars in the first three months of this year.

If telecommunications deregulation is working so well, why are so many of the Baby Bell competitors evaporating? Because theBaby Bells have excelled at stalling and, simply, outlasting their young rivals.

Not to worry, says the FCC. Give it more time.

The check is in the mail.

- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

Recent coverage

Verizon to pay $2.7-million settlement (August 2, 2000)

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