[July 26, 2004]

[FG disagreed] "While I personally have rather good professional relationships with the coaxial access providers, I am under no illusions about them. I am happy with the quality of the service I currently receive from my coaxial provider, the whole triple play. But that's from a consumer perspective, and frankly it's from a "don't complain about their price in public" perspective. From the point of view of my ISP clients, and my CLEC clients, the coax providers are usually no help—they're competition. I fully sympathize with the Brand X's of the world; the Cable Act just didn't give them a strong legal case.

The ILECs invested billions of dollars because they were given a monopoly and a rate of return, as a regulated public utility. They were performing a function that most countries left (in that era) to government. Part of that deal was an absolute and total separation between content and carriage. That's what being a common carrier is about. Now they want to take that inheritance and toss off the responsibilities that came with it.

But that was AT&T, the Bell System. The RBOCs are different. Maybe Powell likes them because he's a princeling, like them. The RBOCs inherited the Bell System public utility network. At the time Judge Greene birthed them, it was clear that they were assumed to be content-neutral regulated stewards of the last mile. In the early years they were expressly forbidden from indulging in content businesses, such as "teleservices". But they were unhappy in that role. The Baby Bells wanted to use their inheritance for their own good, without giving back. Powell relates to that. Had his father been a TV repairman or for that matter an Army Captain, nobody would give Mike the time of day. But as a princeling, son of a famous warrior, he has inherited power far beyond his own capacity to understand it, and he thus relates to other inheritees. Come to think of it, rather like the princeling George the Lesser who appointed him chairman.

The outside plant (access infrastructure—or are you jumbling the words intentionally?) should be neutral, open to all service providers, so they can innovate. And the outside plant owners can innovate too, subject to the appropriate regulatory treatment afforded a natural monopoly.

ILECs should be given fair rates of return on their services, both wholesale (UNE) and retail. Not monopoly rents. Big difference. Of course if the infrastructure (natural monopoly) were truly available to all comers, then there would soon be enough competition at the service layer (switching, teleservices, information) to allow dereguation, while prices are held in check by the marketplace.

UNE-P is a distraction. UNE Loop, IOF, and collocation space are vital to all kinds of service providers. DSL common carriage is vital to ISPs.

Regulating a monopolist the same way as a newcomer, in this business, means that the monopolist crushes the newcomer. Full stop. Regulating the common carrier the same way as a non-common-carrier means that the customers of common carriage are cut off. Why is that so hard to understand? Of course you understand it. You and the ILECs know it, and make doubletalk speeches just to cover up the power play."

[OO agreed] "If you're looking to be sympathetic to a large company, at least pick AT&T, they built the original infrastructure that was given away for free to RBOCs. This is like daddy giving you his apartment building, that's bought and paid for, with a $x monthly rent roll and then the local housing authority orders you to provide a percentage of low cost units in the community's best interest."

[RL responded] "Just to be factual, not to imply I agree with how it was handled, the owners of AT&T pre-divestiture were all given shares of each of the siblings. It was a separation of assets into separate companies where the shareholders all had a relative stake. Nothing was given to anyone for free as you state. My question to you, and the rest of the group, is what do you want the future to look like?"

[OO responded] "Competitive."

— End

 

1. The bottom line is competition

2. Vertical integration will not happen

3. The elusive goal of a truly competitive industry