• Telecommunications: Phoning it in Telecommunications: Phoning it in By St. Louis Post-Disptach – June 9, 2004 In an ironic twist, conservatives on the District of Columbia Court of Appeals and the Federal Communications Commission have handed a conservative president
• Telecommunications: Phoning it in
Telecommunications: Phoning it in
By St. Louis Post-Disptach – June 9, 2004
In an ironic twist, conservatives on the District of Columbia Court of Appeals and the Federal Communications Commission have handed a conservative president an election year hot potato: the possibility that voters’ phone bills will be spiking just about the time the fall campaign shifts into high gear.
Unless the Bush administration appeals to the Supreme Court, a ruling made last March by the Court of Appeals will go into effect next week. The appeals court threw out FCC regulations requiring the four remaining “Baby Bell” phone companies to ask state regulatory commissions for permission to raise prices they charge competitors for leasing parts of the Bells’ network.
The Bells’ competitors say that if the ruling stands, phone rates will rise dramatically in some states, among them Michigan, Florida, Pennsylvania and Ohio, all expected to be battleground states in the fall election.
But Paul Mancini, assistant general counsel for SBC, the largest of the Bell operating systems, said such talk is a tactic designed to bluff the administration into intervening. Prices will go up in some states, he said, but not so steeply as to drive off the competition.
“They’re our competition, but they’re also our customers,” Mr. Mancini said of firms like AT&T. “We want to keep them as our customers, only at a reasonable rate.”
In phone company jargon, this argument is about wholesale pricing for UNE-Ps, or “unbundled network elements-platform.” A UNE-P is defined as a “loop and a plug,” meaning service between the phone in your home and a central switching office, plus a connection to an outside network.
In Missouri, the Public Service Commission allows SBC to lease UNE-Ps for about $23 a month. In Illinois, the Commerce Commission allows SBC to charge only about $12.50. Even at $30 a month, Mr. Mancini said, SBC is losing money.
Free-market advocates, led by FCC Chairman Michael K. Powell, argue that that new forms of phone competition like wireless and Internet voice protocol have erased advantages once owned by the Bells. Thus, they argue, the Bells should be allowed to charge market rates to smaller phone companies who want to use their networks to connect with their customers.
But state regulators, along with Bell competitors like MCI, Sprint and AT&T, say the Bells have never complied with either the letter or the spirit of the 1996 Telecom Act. The Bells, they say, still enjoy most of the benefits of monopoly and should be treated like a regulated utility.
The Bells say their competitors often lease a UNE-P from them at, say, $15 a month, and then charge customers $45 a month, with the Bells and consumers both losing money.
These arguments are arcane but important, because they speak to the future of U.S. telecommunications policy. They’re the sort of arguments the Supreme Court should decide.
