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Politics of telecommunications "competition"
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Date: Tue, 10 Jan 1995 13:35:24 -0500
From: Vigdor Schreibman - FINS
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FINS SPECIAL REPORT January 10, 1995
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POLITICS OF TELECOMMUNICATIONS "COMPETITION" Dramatic Clash Over Real Competition, and Giant Collaborators
Washington, DC--Vice President Al Gore, addressing a Federal-State-Local Telecommunications Summit in the U.S. Capitol, Jan 9, underscored the administration's goal to seek "real competition" in the marketplace of local telephone exchange services [Fins-II2-01]. The Regional Bell Operating Companies (RBOCs) presently enjoy monopoly power and complete control over virtually all of the telephone traffic in the local bottleneck, reliable industry reports disclose. Gore's remarks were aimed squarely at the proposal made last year by Senate Finance Chairman Bob Packwood (R-OR) and Sen. John Breaux (D.LA), calling for complete deregulation of the telecommunications industry by a date certain-without regard to competitive conditions--expected to be presented again this year.
Gore stated that "the game should not begin on some arbitrary date without rules at all on the mistaken assumption that a calendar can replace a rulebooks." He added that "Too many people and businesses have too much at stake to be subject to the vagaries of trying to play now and figure out the rule later." The administration "cannot support a proposal to fully deregulate the local telephone exchanges upon the mere prospect that some theoretical competitor might be able to provide some services to some hypothetical customer," Gore added.
The Vice President's remarks provided a dramatic backdrop for a hearing on telecommunications issues held Jan 9, in the U.S. Senate by the full Committee on Commerce, Science, and Transportation (Pressler, R-SD, Chairman). The list of witnesses scheduled to attend the Senate hearing included, no Democrats, but all the Republican big guns on telecommunications matters: Senate Majority Leader Dole (R-KS), House Speaker Gingrich (D-GA), House Commerce Chairman Bliley (R-VA), and House Commerce Telecommunications and Finance Subcommittee Chairman Jack Fields (R-TX).
Sen. Packwood and Sen. Breaux engaged the witnesses in a spirited discussion concerning their proposal for setting a specific date for local telecommunications competition to begin. "Gentlemen, let the games begin" Sen Packwood exclaimed. Packwood said that Congress should not try to set fair rules for competition because that would defeat the objective of having a simple administrative process. "There will be winners and loosers, and the government should not decide such matters ... the marketplace should," Packwood declared. Republican members of the Commerce Committee seemed to agree with the Packwood formula, although Sen. Stevens (R-Alaska) and Snow (R-Maine) appeared concerned about the potential adverse impact on rural America. The House witnesses generally supported the idea, although none of the members were unable to come up with a viable formula that would assure "a level playing field" in an industry that is currently dominated by monopolists and oligopolists.
Speaker Gingrich did not show up for the Senate hearing. However, Gingrich has devoted considerable intellectual efforts to this subject in the past [See e.g., The Futurist, June 1985]. Moreover, reports circulating around the U.S. Capitol during recent weeks indicate that Gingrich intends to play an important role in designing the future of "the Knowledge Age." INTERACTIVE AGE, reported Dec 12, 1994 that Speaker Newt Gingrich was "looking to a new think tank to map out a Vision of America's high-tech future." The Progress and Freedom Foundation, established for that purpose, has close links to Gingrich according to IA.
Placed under retainer by The Progress and Freedom Foundation, are well known technocrats George Gilder, Alvin Toffler, Jay Keyworth, and Esther Dyson, who have written a plan calling for "deregulation of every aspect of telecommunications." The vision document, which was written by those celebrities of technology is called the "Magna Carta for the Knowledge Age" [Fins-PaN-18]. The document was ultimately expected to be passed on to Gingrich and his aides, as a basis for legislative planning, according to IA.
The "Magna Carta" calls for sweeping deregulation of telecommunications, in the name of promoting "competition," while also calling for "much greater collaboration between the cable industry and phone companies." What is intended is a plan to join the huge fiber optic resources of the phone companies with the massive asset of 57 million broadband links (i.e. into homes now receiving cable-TV service) of the cable TV companies to produce a new kind of national network -- multimedia, interactive. The planners hope that this network would become accessible to Americans of modest means "as costs fall." The authors of the "Magna Carta" attempt to explain the evident sharp contradiction in their plan, between promoting competition through sweeping deregulation and santioning collaboration between the two largest players, with this rationale:
... obstructing such collaboration -- in the cause of forcing a competition between the cable and phone industries -- is socially elitist. To the extent it prevents collaboration between the cable industry and the phone companies, present federal policy actually thwarts the administration's own goals of access and empowerment.
Bell Atlantic Corp., and Telecommunications Inc., proposed last October, a merger of phone and cable resources that could have paved the way for such a national network. A number of lawmakers such as Rep. Edward L. Markey (D- MA), and Sen. Howard M. Metzenbaum (D-OH), expressed "extreme concern" over the anticompetitive nature of the proposed Bell-TCI merger, and the plan was eventually scrapped under a cloud of uncertainty.
George Gilder, one of the team of technocrats who wrote the "Magna Carta" now writes about telecommunications issues for Forbes, ASAP. In an article appearing in the June 6, 1994 issue of Forbes ASAP, Gilder indicated a strong interest in the theory of unrestrained laissez-faire capitalism, and called for a return to the ideas advanced by the Robber Barons of the 19th century- -Andrew Carnegie, John D. Rockefeller, and J.P. Morgan--who he claimed were the architects of America's early industrial growth. Toffler is known as "The Buck Rogers of Blip Sociology." He was co-founder of the World Future Society and author of the landmark work, "Future Shock" and best seller "The Third Wave," concerned with radical changes in civilization brought about by the evolution of technology. Keyworth, was director of the Office of Science and Technology Policy under the Reagan administration. Dyson, is an essayist and lecturer on computer information, and head of Computer Industry Daily.
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