The telecom markets are hamstrung by failures in the design and, particularly, the execution of the Telecom Act of '96, according to presenters at a conference held in Washington yesterday by the conservative American Enterprise Institute and the University of Southern California Center for Communications Law and Policy.

The experts at the conference come from the gray, in-between world at the intersection of industry, government and academia - academically minded industry players, some of whom have put in shifts at the FCC.

They disagreed among themselves about which parts of the act have succeeded, but came to a rough consensus that the industry would look very different if the act had been rapidly and uniformly implemented.

Nicholas Economides , an economics professor at New York University, fingered the slow, sloppy implementation of universal service, which he said has left the RBOCs as the primary beneficiaries of the program and hindered new entrants. "This has delayed the implementation of the act and has made it, to a large extent, fail," he said.

The universal-service problems, and ugly, protracted fights over cost models for unbundled network elements, scared large long-distance players away from resale and carry much of the blame for AT&T's [T] high-cost, high-stakes cable-telephony play, Economides said. "If the act had been implemented quickly...AT&T would not have bought the cable companies," he said.

Jeffrey Rohlfs, a consultant with Strategic Policy Research and a 14-year veteran economist at Bell Labs (since morphed into Lucent Technologies [LU]), attacked the FCC's UNE-pricing methodology, which he said is as divorced from reality as the theories of the "scientists" who told Galileo a cannon ball and a feather would fall at different rates. Like those misguided souls, the FCC has a political agenda, Rohlfs said. "When we have a regulatory agency at the turn of the 21st century using 16th century scientific methodology, you have to wonder," he said.

Another critical failure in implementation of the act is the delay of rate rebalancing -- removing residential subsidies to cut business costs, Rohlfs said. He laid most of the blame for that failure at the feet of state utilities regulators, who he said have a "lobotomy approach" to regulation that leaves the left sides of their brains pushing competition while the right sides resist rate rebalancing, which is political dynamite.

Even the audience was fulminating. Randy May, a senior fellow at the Progress and Freedom Foundation, accused former FCC Chairman Reed Hundt of exploiting weaknesses in the act to coordinate telecom policy with the White House to an extent that was "almost shocking." "That's what happens when Congress drafts laws that are overly ambiguous," he said.

Paul Coe Clark III