August 23rd, 2005
Death by deregulation
In David Berlind’s latest Alice in Wonderland trip through the American telecommunications universe — "Are Baby Bells abusing gov’t granted right-of-way?" — he credits Bob Frankston, the co-inventor of the VisiCalc electronic spreadsheet, for inspiring this tour-de-force of imaginative fact development.
Mr. Frankston’s VisiCalc allowed the computer owner to invent any numbers he wished for his electronic spreadsheet. Apparently Mr. Frankston is applying the same principle to American history, inventing principles that never existed, suggesting factual situations that can’t possibly be realized.
1. The American telephone industry was the product of a regulatory agreement between AT&T and state and federal regulatory authorities. The bargain struck by AT&T CEO Theodore Vail and the state of Wisconsin provided that the telephone companies would provide needed service, owning and operating the required switching facilities and lines to reach customers in exchange for fair and reasonable rates. Rates would be sufficient to permit purchasing new equipment and depreciating the old gear.
2. Local wired telephone service, like local electricity, water and natural gas service, was generally believed–with very rare exceptions—to be a "natural monopoly." There was a single provider in a given territory. Local companies would hand off traffic to neighboring companies. Transcontinental service–for Bell and non-Bell companies— was provided by AT&T Long Lines. Customers didn’t have a choice of local providers.
3. Transcontinental natural gas and oil pipelines operated on a different principle. They were designated "common carriers." They were required to carry the traffic–natural gas and petroleum products—of anyone who wished to ship natural gas or petroleum products at the posted tariff rates.
Mr. Frankston’s argument–in so far as it has any logical basis—confuses local telephone companies with transcontinental natural gas and petroleum pipelines. No local telephone company—or cable company or wireless carrier–has ever been designated a common carrier available to anyone who wishes to use it.
That’s a pretty simple concept, isn’t it? But wait, there’s more.
Mr. Frankston’s confusion would be understandable if he believed that the FCC is promoting "competition" for telecom services. Underlying each and every one of the tortuous "deregulation" steps taken by the FCC has been the elimination of competition as it is understood by ordinary Americans.
The FCC’s version of the "last mile" in telecommunications is like the condemned prisoner’s last meal. Death follows quickly in both cases.
Brick by brick, decision by decision, under the rubric of "deregulation" the FCC has created an essentially impenetrable wall to local competition for telecom services. Customers can purchase landline services from the local Baby Bell, cellular services from a shrinking handful of suppliers, or Internet access or telephony services from the local cable company.
Mr. Frankston may be entranced by the notion of competitive local telecom companies. That’s as fantastic as anything in Alice in Wonderland.
Evan Wilner was Delaware’s public advocate from 1979-1991.
