Broadband, good; RBOCs, bad
In response to the May 8 Perspectives column by Paul Beckner, "Ending the broadband rip-off":
I agree with Beckner that something needs to be done to stimulate the telecommunications industry, and broadband residential service is a good way to do this. Unfortunately, his apparent blind faith in the RBOCs (regional Bell operating companies) is grossly misplaced.
Beckner argues that deregulation of broadband services will discourage RBOCs from investment in the expansion of broadband services, because there will be no monetary incentive. Fortunately for us, we only need to look back a few years, to ISDN deployment, to see this is not true.
ISDN was introduced long before the Telecom Act was passed, and, with the advent of the Internet, quickly became a technology of interest to people who wanted faster Internet connections. How did the RBOCs respond to this cutting-edge technology? Well, Verizon priced ISDN lines at $300-plus a month for unlimited access (just for the line--this did not include ISP charges). That's right, in a regulated environment--unencumbered by those nasty competitors--Verizon priced one of the means of high-speed consumer Internet access out of the range of most people.
In addition to the high price, attempting to get an ISDN line installed was, and still is, a difficult chore. If a customer is lucky enough to find someone at Verizon who is aware of what ISDN is, they might be able to get an installer to come out and hook up the line, or the installer might miss three to four appointments. Either way, it can take two or three weeks, at a minimum, to get technology that has been around since the '70s installed.
Perhaps the ISDN example is unfair. After all, ISDN was old technology, and it was popular before the RBOCs were forced to become nimble, agile competitors. What about a more modern example? Let's look at DSL.
There were three main companies offering DSL to consumers: Covad, NorthPoint and Rhythms. NorthPoint shut down its network after Verizon backed out of a merger deal. Rhythms went into Chapter 11 and sold its assets to WorldCom for pennies on the dollar. And Covad went into Chapter 11 and emerged a much smaller company.
How did the RBOCs respond to the problems the CLECs (competitive local exchange carriers) had? They waited until the three companies were either in Chapter 11 or network shutdown mode and then raised their prices $5 to $10 per month.
Beckner expects us to believe that the RBOCs will behave any differently now, if high-speed Internet access is deregulated? I find that hard to believe.
Beckner also states that there are 2,040 local phone companies, saying, "Not bad for an industry that didn't exist just a few years ago." That statement is false.
Many local phone companies have been around for 10, 20 or more years, especially in rural areas, where the RBOCs could not be bothered to provide service. These local phone companies that serve rural areas, and have done so for many years, make up the bulk of that 2,040 number Beckner quotes.
Yes, many CLECs have popped up over the last few years, but many of them have died out quickly. Some have died out because of their own management incompetence. Others have died because the RBOCs intentionally make it difficult for CLECs to provide service. Numerous lawsuits have been filed against RBOCs for failing to provide the service they are required by law to provide.
Once again, if RBOCs aren't capable of offering competitive services, when it has been mandated by law, why would we expect them to offer services in a competitive fashion in a regulated environment?
History has shown time and time again that RBOCs are incapable of acting in a competitive manner without government intervention. Despite their claims to the contrary, this has not changed and will not change. For high-speed access to be offered in a competitive manner, RBOCs must be forced to open their networks to competitors, and there should be stiff penalties for failing to comply with regulations.