If institutional investors and stockbrokers hang on every word by Alan Greenspan, senior telecom industry executives pore over every utterance of the chairman of the Federal Communications Commission.

And something that the new FCC chairman, Republican Michael Powell, said a few weeks ago has set off a chain reaction with implications for almost every type of service provider.

At his initial press conference after his appointment by President Bush, Powell expressed skepticism over any type of new regulatory idea that would deepen Bell companies' commitment to share their loops in various new ways. Powell said, not once but two or three times, he didn't want to measure telecom competition by the number of "Bell look-alikes" that come into a market. Powell added that what was more important was competition among technologies for the end user -- a clear preference for finding ways to force telephone, cable and wireless carriers to duke it out against one another.

One danger here is that the "Bell look-alikes" don't recognize themselves in what Powell said and thus don't realize the inherent threat to their business. No competitive carrier has ever come to me claiming that they're "just like the Bell company." But Powell wasn't talking about attitude, culture, marketing or even quality. If a carrier delivers service over rented copper wires and hands over a bill every month, that's something like a look-alike in his book.

Already Powell's comment is having a broad effect in Washington, and the CLEC community isn't too happy about it. Forget new regulations -- since Powell's press conference I've seen a number of "petitions for reconsideration" of existing rules pour into the FCC. And on Capitol Hill, movement is gaining force for a renewed Bell-backed push for a particular type of data deregulation that stalled out last year. It would enable Bells to marry their DSL and other Internet access lines to their own Internet backbones that could for the first time cross local calling boundaries, even before each Bell wins regular state-by-state long-distance authority.

All that is playing havoc with a political goal that CLECs had staked out at the beginning of the year -- to get the federal and state governments to consider one of those new loop-opening ideas that Powell seems to be dismissing. It's the idea of structural separation, in which Bells would be forcibly split into wholesale and retail companies. Under this scheme, the wholesale company would make existing loops (and other network elements) available to all carriers on an exactly equal basis, and the surviving retail Bell company would be one of the carriers fighting for the loops as if it were just another CLEC.

Powell has argued that promoting technological competition rather than aiding "Bell look-alikes" would do more to create actual investment in mass-market broadband services. Now, in the last few days, a group of conservative think tanks has come out with a letter to Congress applying the same logic to the structural-separation idea. The groups, including the Cato Institute, the Progress & Freedom Foundation and Citizens for a Sound Economy, say they fear structural separation would cause both CLECs and the new wholesale loop companiies themselves to skimp on new infrastructure investment. The loop companies would focus on equal access more than innovation, according to this line of argument, and the CLECs in turn would sit on their hands knowing that the dominant carrier could not gain an advantage over them.

The think tanks' letter is available at:

http://www.pff.org/SeparateSubLetter022701.htm

» posted by ITworld staff

Network World

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