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2HRS2GO: Communications technology, not law, has let us down

COMMENTARY--The latest in a long line of telecom industry angst reflects a failure--or success--of technology, not legislation.

Some communications industry observers are screaming this week about a congressional proposal to let regional Bell operating companies sell data services outside their home regions. Those Baby Bells would also be released from a requirement to provide high-speed lines to data competitors.

Trade groups formed by long-distance giants, competitive local exchange carriers and small Internet service providers decry the bill before the U.S. House of Representatives as an unfair gift for SBC Communications (NYSE: SBC), Qwest (NYSE: Q), Verizon Communications (NYSE: VRZ) and BellSouth (NYSE: BLS). Critics fear it will mean the end of real competition, and a bad thing for consumers.

Perhaps, although I doubt it. In the long run, the majority of U.S. households will have at least three broadband choices: DSL (digital subscriber line), cable and satellite. If the alternatives to the Bells seem scant now, don't blame bad lawmakers. Blame technology disappointments.

Start by looking at a successful idea: the phone monopoly. Unlike most of the rest of the world, our country has an excellent fixed wire system for voice. It's extremely reliable and even if local phone fees have shot up 70 percent over the past 17 years, the cost remains cheap compared to other industrialized countries. The U.S. systems works, and it works because one company owns the line going to your house.

Unfortunately, it's also a big problem for anyone else who wants to sell you communications services. They have to rent the Bells' property, because no one wants 10 different companies digging up the streets and stretching lines to homes.

Competitors will tell you the Baby Bells provide lousy service to competitors and charge too much besides. The Bells' track record of FCC fines lends fuel to that argument. I certainly don't want to seem like a Bell defender.

But I never looked forward to being a victim of phone-slamming by some CLEC (competitive local exchange companies) anyway. I never expected much from the likes of Covad Communications (Nasdaq: COVD), NorthPoint Communications or Rhythms NetConnections (Nasdaq: RTHM). You should never bank on high cash-burn business models that require piggybacking on a competitor's infrastructure to offer a service that is essentially indistinguishable.

What I did and still do hope for is competition from something different. Not another DSL vendor, but a viable, competing technology. That's where broadband competition has to come from. And that's where the real disappointment has been.

Where are my wireless local loops? Where is my cable telephony?

I'll use an example with which I'm more than a little familiar: me. I have a DSL line at home. I might consider another broadband option if AT&T (NYSE: T) would bother upgrading the cable line on my block here in San Francisco.

But it hasn't, and so nine months after an AT&T customer service representative told me I should be able to get digital cable any day--the next street over was upgraded a long time ago--I'm still stuck with a limited selection of channels and no Internet option besides a copper phone line.

Granted, AT&T digital cable is available in much of the company's network. But it's not enough, or it's being marketed poorly. Either way, that's not the Baby Bell's fault. It is Ma Bell's.

How about high-speed wireless access? After all, the Ricochet service of Metricom (NYSE: MCOM) has a network in the Bay Area that can run at ISDN speeds.

Too bad it's expensive at $75 to $80 per month. Still, more folks would think about it--if the kinks were all worked out. But Ricochet speeds aren't always stable, it's not always easy to get through, and even after you do, your connection is anything but rock solid. "Achieving the designated connection speed of your Ricochet service will depend on your specific location and network conditions. Your actual performance may vary."

Can't blame SBC for that one either.

People rightfully decry the Baby Bells' foot-dragging and congressional lobbying, but the reality is that you're always going to have these problems as long as the Baby Bells are structured the way they are.

The only way to give all communications providers a fair chance on copper phone lines is to emulate the scheme used for electric power deregulation: split the Baby Bells into wholesalers and distributors. One company remains a monopoly whose only job is to keep the network running, and everyone else competes to sell consumer and business service over the lines.

Take the Bells out of the consumer communications business entirely, and you don't have problems. It should be easier than electricity deregulation, because the Bells don't have billions of dollars in "stranded" debt tied up in nuclear power plants and independent power contracts.

Of course, that kind of government action would be harder to sell than skis in the Sahara.

So I put my hopes in competing technology. It won't save the DSL vendors, but I don't need 20 choices for the same kind of high-speed Internet access anymore than I need 20 choices for a car. Does anyone besides Marty McFly miss DeLorean? In the long run, will anyone miss NorthPoint?

Just give me enough vendors to maintain competitive prices and service for all broadband. Give me an alternative to DSL, not a duplicate. 22GO>