Battle Between Local Phone Competition and Broadband
Deployment May Continue Into America's Courts
02/21/2003
CNBC: Business Center
SUE HERERA, co-anchor: Parties on both sides rushed to claim victory after yesterday's long-awaited and much-debated FCC ruling on local phone competition and broadband deployment. But the real battle may still be to come in America's courts. CNBC's Hampton Pearson has more.
HAMPTON PEARSON reporting:
At a Georgetown University telecom symposium, FCC Commissioner Kevin Martin defended his vote for what many telecom industry experts say is the status quo for local telephone competition. Martin says the 32 FCC ruling preserving local competition was balanced by a companion decision that creates a more deregulatory environment for broadband.
Mr. KEVIN MARTIN (FCC Commissioner): We're not only going to be able to spur investment in next-generation broadband infrastructure, but also preserve the existing competition for l--local telephone service by maintaining access to those--to the network elements that are necessary for new entrants to be able to provide competitive services.
PEARSON: Competition between long-distance carriers and the regional Bells will intensify because the FCC says the Bells still have to give discounted access to their networks to competitors. AT&T Chairman David Dorman says his business is adding thousands of new local phone customers every day.
Mr. DAVID DORMAN (AT&T Chairman and CEO): Now, for at least the short term, you know, we're going to conteep s--keep selling consumers and small businesses services. We're--we're getting about 10,000 customers a day today. The total industry is probably up into the 15,000, 16,000 range coming from the Bells.
PEARSON: State regulators will continue to set rates for network access, as well as local phone rates consumers pay--a good thing for consumers since most state regulators focus on keeping phone bills low.
Ms. REBECCA KLEIN (Texas Public Utilities Commission): The states were very interested all along and vociferous in attaining a meaningful role in trying to create an evidentiary record and determining whether there's impairment in their differing markets, and the FCC listened.
PEARSON: But the same divided FCC voted to ease requirements for discounted access to fiber optic lines for high-speed Internet access, a potential win for the regional telecom firms because it will provide incentives to invest in building out new networks. But economists say consumers will pay a price.
Mr. NICHOLAS ECONOMIDES (NYU, Stern School of Business): I think that this--this decision will cost the consumers, especially for broadband Internet access. Consumers will end up paying more and have less choice in broadband Internet access be--because of this decision.
PEARSON: And the courts have rejected two previous attempts by the FCC to revise the 1996 Telecom Act. Another legal challenge appears likely. Sue.
HERERA: Thank you, Hampton. We'll see you Monday.
PEARSON: OK.
HERERA: Hampton Pearson in Washington.
Let's take a look at how the Baby Bells did today. Pretty much an upside bias with the exception of SBC, which lost 57 cents, to $20.73.
RON INSANA (Co-anchor): Straight ahead on BUSINESS CENTER, Alan Greenspan's not convinced about the need for stimulus. Is that a signal that he's ready to leave the Fed? We'll talk about the chairman's outlook.
HERERA: And then we tell you about a group of investors that counts CEOs and presidents among its members and the investment opportunities that that group has discovered.
INSANA: And it's been a Sweeps to remember. We'll look back at this winter's pitched battle for network television ratings. Much more in store when BUSINESS CENTER returns.