IP: Bells Stand to Benefit From New FCC Chairman's Neutrality, Economists Say

[David Farber <dave () farber net>]

Bells Stand to Benefit From New FCC Chairman's Neutrality, Economists Say

By Peter S. Goodman,

Washington Post Staff Writer

Wednesday, May 2, 2001; 10:04 PM

Even before the Bush administration brought its deregulatory bent to 
Washington, the telecommunications business was a steep challenge for those 
competing against the Baby Bell companies - the regional giants that 
dominate local telephone service. In the five years since Congress allowed 
new companies to compete, they have captured a mere 8 percent of the 
nation's local telephone lines.

Now, as upstart carriers land in bankruptcy, suffocated by a critical 
shortage of capital, some say the promise of competition is dying. Despite 
such warnings, the new chairman of the Federal Communications Commission, 
Michael K. Powell, is staying true to his guiding philosophy: He is 
standing aside and allowing market forces to determine the outcome.

"I am not the grand master chef of competition," Powell said in an 
interview last week. "The government can create the conditions and the 
environment for private entities to compete. We don't come out and start a 
phone company in your neighborhood."

But a growing chorus of economists claims that anything short of regulatory 
intervention amounts to tacit approval for the monopolistic grip of the 
Bells. To reach their customers, the new entrants must have access to the 
local telephone wires that connect to homes and businesses. But since those 
wires are controlled by their rivals - the Bell companies - it won't happen 
without strict rules, they argue.

<snip>

http://www.washtech.com/news/telecom/9487-1.html



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