Barry M. ORTON
Professor of Telecommunications and Director of Senior Learning, Liberal Arts and Applied Studies
Phone: (608) 262-2394; email:

The Capital Times, September 24, 2002

Spencer Black & Barry Orton: Bells' dereg bill a bad idea

By Rep. Spencer Black and Barry Orton

The four "not-so-Baby Bells" (Verizon, BellSouth, Qwest, and SBC, which includes Ameritech) are at it again: lobbying the U.S. Senate to pass a law that would handcuff smaller competitors and limit states' powers to protect consumers.

The legislation, the Broadband Regulatory Parity Act of 2002 (S. 2430; known as the Breaux-Nickels bill), eliminates significant state and federal controls over the terms and conditions of competition in telecommunications. Breaux-Nickels would free the four remaining regional Bell operating companies from existing requirements to open their data networks to local competition before the mega-Bells could offer long-distance data service.

The Public Service Commission of Wisconsin has asked the state's two senators to oppose the bill, writing that it "seriously undermines the key local market opening requirements contained in the Telecommunications Act of 1996, and ensures years of costly and time-consuming litigation."

While the Bells argue that only high-speed Internet service would be deregulated under the bill, the Wisconsin PSC and those of 30 other states vehemently disagree. The PSCs point out that the bill would significantly degrade state oversight of the facilities that carry voice as well as data, and would diminish the prospects for local voice or high-speed competition as well. Further, the PSCs are concerned that the bill would remove incentives that encourage the Bells to upgrade their facilities in urban and rural underserved areas.

Wisconsin's experience with telecommunications deregulation stems from 1994, when the industry persuaded the Legislature to eliminate much of the state's powers in exchange for promises of infrastructure development, high-tech economic development and employee job security.

Several years later, when Ameritech service quality (and its employee base) went down the tubes, the PSC could do little but scold; its ability to impose financial penalties had been eliminated in the deregulation legislation. The people's watchdog had been both chained and de-fanged. The promised high-tech economic development was spread among all the other states that bought the same deregulatory bill of goods.

The premise of Breaux-Nickels is that there should be "regulatory parity" among broadband providers, and that the leading providers, the cable television operators, offer high-speed cable modem service without state or federal oversight. Indeed, a recent Federal Communications Commission initial declaratory ruling classifies cable modems as an unregulated "information service" and would eliminate the minimum customer service standards that local governments apply to the rest of cable television's offerings. Nevertheless, there is no need for "regulatory parity" when the Bells have always had huge regulatory advantages over both cable companies and competing local carriers. These advantages exist on the local, state and federal levels, and in some respects, Breaux-Nickels would only exaggerate them.

Even after agreeing to the competitive requirements of the Telecommunications Act of 1996 when the legislation was passed, the four Bells had fought the act's provisions in court for years, until recently losing at the U.S. Supreme Court, which dismissed the Bell's claims that they lose money when forced to lease lines to competitors.

Over the last five years, the four Bell companies have enjoyed an enormous windfall from the growth of consumer use of the Internet as many households paid for second phone lines for dial-up use. Cable modem service has begun to significantly reduce that windfall, and the Bells' DSL service lags far behind in many areas in terms of availability, ease of installation and price.

Differences in regulation did not create these lags, the Bell companies' slowness in deploying the service did.

Who really loses under Breaux-Nickels? Consumers of high speed Internet service. Breaux-Nickels could preclude states and local governments from adopting or enforcing performance standards, customer service standards or basic consumer protection laws on broadband service.

Can't get timely help with your new DSL service? Getting billed for more than you are getting? Upload speed is far slower than advertised? Too bad. "Regulatory parity" could ultimately mean that a consumer's only recourse would be to write a complaint to the FCC in Washington and waste a perfectly good postage stamp.

Don't let the four Bells lobby their way out of competition in broadband. Don't let the giant Bells pre-empt the states, their most effective regulators, from protecting the public. Don't let the already bloated Bells get fatter at the expense of competitors and consumers.

Rep. Spencer Black is minority leader of the state Assembly. Barry Orton is professor of telecommunications at the University of Wisconsin-Madison.

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