The Telecommunications Act Turns Four

The Telecommunications Act Turns Four
By Bob Rowe
Posted: 02/2000

Rob Rowe

When the Telecommunications Act passed in 1996, I shared the enthusiasm of its sponsors in Congress and the administration. The act was an historic compromise--a syzygy in which the sun, the moon and the earth aligned to produce a singularly powerful tide in telecommunications policy.

Congress struck a series of careful balances between customers and providers, incumbents and new entrants, local and long-distance companies, urban and rural areas, the FCC (www.fcc.gov) and state commissions, competition and universal service, and deregulation and regulatory preservation.

Unlike some, I didn't think robust competition would spring to life overnight as statutory and economic barriers were swept away. I made two predictions: 1. Competition would develop slowly, especially for mass-market customers; and 2. In rural areas, a significant share of the competition would be homegrown. From this realistic perspective, there's more cause to celebrate with each anniversary of the act's passage. At the same time, challenges exist implementing the act's vision within the framework Congress created.

So, what have we accomplished and what's left to do?

In absolute numbers, ever more customers are buying service from competitive providers. Companies are offering new services and creatively repackaging old services. New technologies are being developed and deployed in all layers of the network as telecom's computer convergence forces us to abide by Moore's law. Network interoperability is advancing, moving us slowly toward a network of networks. Firms are getting into one another's lines of business, resellers are becoming facilities-based providers and everyone wants to become a data CLEC. Customers who 10 years ago had never used a computer, seven years ago had never been online, four years ago couldn't get dial-up for the Internet, now are impatiently awaiting wideband access.

However, while many mass-market consumers are moving to higher levels of network utilization, many others are not. Consumer advocates argue that low-volume consumers are not only being left behind, but are bearing the burden of rate rebalancing, increased end-user charges, sometimes deteriorating levels of service and increased consumer abuses. How do we answer these charges, respond to customer complaints and remain true to the Telecom Act's "pro-competitive, deregulatory" vision?

The National Association of Regulatory Utility Commissioners (NARUC) (www.naruc.org), its member state commissions and its academic and research affiliates, such as the National Regulatory Research Institute (NRRI) (www.nrri.ohio-state.edu), have responded by identifying consumer protection and education as core missions across all utility industries. We've developed new ways to inform and protect customers, reflected in documents such as the "No Surprises Package" (www.naruc.org/Resolutions/summer98.htm) and a growing series of insightful reports from NRRI (www.nrri.ohio-state.edu/download.htm). Most important, NARUC created a standing committee devoted exclusively to Consumer Affairs.

Observing the development and resolution of competition-related public policy issues since the act's passage has been like watching a python swallow a pig. Starting at the business end, the lump of issues (wholesale pricing for example) is big and hard to digest. As the pig moves south through the snake, the issues become more focused (building access, line sharing), but no less important. We still have important work to do implementing wholesale price deaveraging, figuring out appropriate ways to conduct wholesale-level enforcement and fine-tuning other rules based both on experience and on new developments (such as the creation of data CLECs).

The corner piece in the Section 271 jigsaw puzzle is now in place: the FCC's decision for Bell Atlantic (www.bell-atl.com) in New York. Everyone recognizes the tremendous leadership of the New York, Pennsylvania and Texas commissions, among others. The structure of Section 271 places a special burden on state commissions to develop a record, and creates an opportunity for them to solve problems. In the US WEST Inc. (www.uswest.com) region, many states are participating in an Operations Support System Collaborative to work through the most difficult competitive checklist issues in an open problem-solving approach involving both US WEST and potential wholesale customers. Information about the collaborative is available on the group's web page (www.nrri.ohio-state.edu/oss.htm).

What about universal service? Is it antithetical to competition? Or, structured properly, can universal service become a tool to extend the benefits of competition to more customers and more regions?

The act set ambitious goals for universal service, expanding the scope to include the demand pull of rural health care, libraries and schools, and raising the bar to require reasonable comparability of rural and urban rates and service (including access to advanced service) and declaring universal service is an evolving concept. For the nonrural fund (supporting companies with more than 100,000 access lines), the FCC's fall 2000 orders set a framework, which may likely be revised through reconsideration or appeal.

So far, there is much less controversy concerning the importance of getting it right for the small cooperatives and companies that generally provide first-rate service to the most rural areas. So far, the Rural Task Force, which will make recommendations to the Universal Service Joint Board next fall, has been exemplary in moving beyond position-based advocacy to try to do the right thing for the rural United States.

Meanwhile, Section 706 directed both the FCC and state commissions to promote access to advanced telecommunications capabilities. NARUC has described Section 706 as an invitation to "grab the brass ring" rather than "pick low-level fruit." In August, NARUC submitted to the FCC a detailed proposal for a Federal-State Joint Conference on Section 706. Last fall, the FCC created the Joint Conference, which is now undertaking a series of regional field hearings and pursuing other efforts.

Done thoughtfully, promoting economic and community development offers state commissions new challenges, opportunities and ways of doing business. Incumbents and new competitors; large companies, small companies and cooperatives; users of a range of technologies; all have roles to play ensuring we succeed.

We're not likely to catch the wave of a new telecommunications syzygy soon. We'd better ride the wave we caught in 1996.

When the Telecom Act turns five, its success or failure will depend increasingly on your efforts in the market, and less on our efforts as regulators.

Bob Rowe is president of the National Association of Regulatory Utility Commissioners (NARUC) (www.naruc.org), former chairman of the NARUC Telecommunications Committee; a member of the Federal-State Joint Board on Universal Service; an ex officio member of the Federal-State Joint Conference on Advanced Telecommunications Services; Chairman of the OSS Collaborate of the Regional Oversight Committee for US WEST; and a commissioner of the Montana Public Service Commission. He can be reached at (406) 444-6167.

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