More WSJ Fiction

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Rob Frieden <rmf5 () psu edu>
Date: Sat, 15 Feb 2003 17:03:13 -0500
To: dave () farber net
Subject: More WSJ Fiction

Hello All:

        Bless their hearts: the editorial writers of the Wall Street Journal
just cannot seem to get their  facts straight, of for that matter, let the
facts get in the way of their politics.  A few weeks ago, the Journal
editorialized that government refusal to support monopolization of the
direct broadcast satellite business would ruin the prospects for satellite
delivered Internet access to rural areas. Apparently more transponder
capacity and monopoly pricing would eliminate the technological
disadvantages in satellite point-to-multipoint data services.

        In a Thursday Feb. 13the editorial the Journal demonized FCC
Commissioner Martin and "interventionist" state public utility commissioners
for endorsing a slower approach to deregulating the RBOCs.  Again the
Journal never got around to fact checking. It sees a migration from wired to
wireless services as "accelerated cherry-picking of profitable Bell
customers who subsidize universal service for the poor," despite the fact
that cellular subscribers make universal service contributions and many
wireless consumers subscribe to a Bell affiliate.  So let me get this
straight: a satellite monopoly is good for rural service, but migration to
competitive, wireless alternatives is bad, or is universal service bad
except when it justifies a merger?

        The Journal also stated that "under the FCC's sharing rules, any
profits from investment in DSL are socialized while any losses are borne by
the Bells themselves."  First the RBOCs reported billions in profits for
2002.  This week's edition of Business Week reported SBC's 4th quarter 2002
margin at a juicy 21%.  Second, rate payers underwrote the Bell's embedded
copper investment by paying fully compensatory, regulator approved rates
replete with subsidies. Third, the Supreme Court upheld the
Telecommunications Act of 1996 prescription of forward looking
costs--admittedly below an arm's length, market drive rate, but not
confiscatory.  Forth, if DSL and unbundled network elements are so low one
would have expected the RBOCs to make some "easy money" by leasing UNE-Ps in
markets outside their home territories. Fifth, the RBOCs themselves lobbied
for an a quid pro quo in the '96 Act: loss of local exchange market share in
exchange for new market opportunities such as inter-LATA long distance.  The
fact that long distance has become a low margin commodity business should
not eliminate the duty of the Bells to comply with the deal they struck.

        The stakes are too high to let fiction replace reality.

        


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