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Administration blasts Baby Bells' "stall ball"

A key Clinton adviser lashes out at the Baby Bells for dragging their heels in opening their local territories to rivals.

WASHINGTON--A key Clinton administration telecommunications adviser today lashed out at the slow pace of competition in local telecommunications markets, blasting the Baby Bells for dragging their heels in opening their local territories to rivals.

Commerce Department assistant secretary Larry Irving, who has taken a lead on the administration's Internet and telecommunications policy, singled out the dominant local phone companies for playing a high-stakes game of "stall ball." The companies have tried to protect their markets through litigation and other legal foot-dragging, preventing competition from reaching residential consumers, he said.

"Local telecommunications competition has come very slowly," Irving said in a keynote speech at the Telecommunications Policy and Regulation conference here. "It appears that the only person benefiting is the high-end consumer. That is simply unacceptable."

Irving's statements marked one of the administration's most biting attacks yet on the large local telephone companies' actions. Nevertheless, both the White House and Congress have been clear in recent months that they are disappointed with the progress of the 1996 Telecommunications Act, which was intended to jump-start competition in both local and long distance arenas.

The two political forces differ in their remedies, however. Irving said the act was essentially written correctly, and that the regulated companies--primarily the Baby Bells--needed to stop spending their time in court and start engaging with their competitors.

But a group of influential congressional Republicans, led by Sen. John McCain (R-Arizona) and Rep. Billy Tauzin (R-Louisiana), say the act and its implementation by the Federal Communications Commission are at fault.

"The seeds of the act's destruction are in the act itself," said Lauren Belvin, senior staff counsel for the Senate Commerce Committee and a McCain advisor. Local and long distance companies both have economic reasons to protect their markets under the act's provisions, she added: "This statute was made for 'stall ball,' and that's what you're getting."

The group of congressional critics has said it will introduce legislation next year that would scale back the FCC's powers, and may look at changing some of the provisions of the act.

Using the bully pulpit
In the telecommunications arena, the administration is limited largely to the power of persuasion, rather than having any real influence over companies' decisions. Irving has often led that role by sketching a vision of a society driven by the quick technological change and gains more characteristic of the Internet sector.

But those gains are being threatened by the dominant local companies' tendencies to use litigation and other legal means to keep from rolling out true competition, Irving said.

"We have bandwidth constraints," the assistant Commerce secretary said. "We're not getting what we need as fast as we need it."

Regulators will play a key role in ensuring that the local companies don't monopolize data services and slow down the development of the broadband markets as they have the local voice markets, he added.

He cited the filing by five of the big local phone companies and computer companies such as Compaq and asked earlier this week that they be allowed to offer high-speed digital subscriber line (DSL) service directly to consumers and businesses, instead of through a subsidiary. They also asked that they not be forced to sell their DSL services to rival companies at discounted wholesale prices, adding they would in return open their markets more quickly and offer unbiased access to the broadband services to ISPs.

"I only wish that this coalition had included all the interested parties," Irving said. "I think we have to look critically at this proposal."

Belvin agreed that the future of competition lay in the data services market, but said Congress may need to update the Telecommunications Act to get to that point.

"We're only three years past the passage of the act, and we're looking a little antiquated by focusing on voice competition in the local loop," she said. "It's a much bigger stakes game now."