Comments Stress Need for Real Competition in Telecom
WASHINGTON, D.C. - With Pennsylvania’s Public Utility Commission in the throes of reexamining rates such companies as AT&T and Worldcom must pay for the use of incumbent phone providers’ facilities, PFF Senior Fellow and Director of Communications Policy Studies Randolph J. May was invited to address the Keystone state’s policy community at a Wednesday briefing in Harrisburg sponsored by the Commonwealth Foundation. May presented the results of his new study, “Pennsylvania Faces A Choice: To Continue to Promote Real Telecom Competition – Or Not,” to a group that included state legislators and other officials.
At issue is whether AT&T, Worldcom and other competitors should be given price breaks by regulators. May has concluded such an action would cost jobs and harm needed telecommunications investment and innovation. “The Pennsylvania commission is now being asked – as part and parcel of a coordinated, national strategy led principally by AT&T and Worldcom – to drastically lower the rates at which the incumbent local carriers like Verizon currently must share network elements,” writes May. “AT&T and Worldcom claim they cannot ‘survive’ as ‘competitors’ unless they can obtain…greatly subsidized rates.”
Under the 1996 Telecommunications Act, incumbents must share their networks with competitors (either ‘piece-parts’ or an assembled package). State utility commissions set rates competitors must pay, subject to FCC-established pricing methodology.
May’s warning to Pennsylvanians: “Investment in new advanced telecommunications facilities by Verizon will be stifled, and the CLECs themselves will lose all incentive to invest in new facilities in order to build sustainable businesses. Innovation in network infrastructures and new services will dry up, with an inevitable further adverse impact on jobs in the already-decimated telecom and related high-tech sectors of the economy. And the Commission will have retreated down a path of ‘managed competition’ in which it will be pressured to set –and continually reset– UNE prices at levels at which the CLECs claim they need to ‘survive’. In other words, the Commission will have bought into the idea that its role is to maintain a regulatorily-ordained ‘market share.’”
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.