FCC assessing local telco competition

Federal regulators prepare a report on the state of competition in local telephone markets for the House Commerce committee, to be completed early this week.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
3 min read
Federal regulators are preparing a report on the state of competition in local telephone markets for the House Commerce committee, to be completed early this week.

The Commerce committee is looking at competition in a review of how Congress' 1996 Telecommunications Act is playing out in the local and long distance markets. The FCC's report is part of a series solicited by chairman Tom Bliley from the Federal Communications Commission, industry and consumer groups.

The contents of the FCC's letter have not yet been made public, but FCC staffers say much of the contents will be drawn from a report on local competition released last Friday.

In that report, the FCC noted that revenue for new alternative local providers doubled in 1997, to nearly $3 billion. But the alternative providers still accounted for less than 5 percent of the local phone market, even using the broadest estimates available.

The report does show the potential developing for significant competition, however. New local providers--which include the big long distance companies such as MCI WorldCom, are building fiber optic networks far faster than are the dominant local companies.

The alternative local providers tripled the capacity of their networks between the end of 1995 and the end of 1997. By that time, they had created about 11 percent of the nation's local fiber network, the FCC report said.

Legislators will likely use results of the FCC's report, as well as the information from other industry and consumer groups, in next year's review of the FCC's implementation of the Telecommunications Act.

Bliley has said that he is sympathetic to the role of both federal and state regulators in pressing for deregulation. "I have always stated that it will take time for competition to develop," he wrote in his October letter calling for the series of reports.

"Rules have to be written, capital has to be raised, technologies have to be deployed, services have to be offered, and consumers have to be won," he added. "None of this will happen overnight."

But other legislators have said the FCC is responsible for the slow state of progress towards competition, and have promised to introduce legislation next year scaling back the regulators' powers.

Baby Bell companies, which have been blocked from entering long distance markets by the FCC, have said the FCC is blocking competition with its interpretation of the 1996 Act.

But competitors ranging from AT&T to the small resellers of local telephone service say the Bells are responsible for the slow rollout of competition for local phone service.

"While Congress established the regulatory infrastructure necessary to allow for the development of a competitive local exchange market, there remains?but one overall obstacle to the realization of that end--continued resistance by incumbent [local telephone companies] to the competitive provision of local telephone service," said the Telecommunications Resellers Association in its report to Bliley's committee last week.

A staffer for the Commerce committee said today that the FCC report had not yet arrived, but that it was expected early this week.