Dispatches From the Telewars- A Review of the recent FCC rulings

DATELINE: TELESTAN

CORRESPONDENT: Bob Rowe (apologies to Ernie Pyle and Audie Murphy)

(In addition to reporting from various policy war zones, Rowe is Chairman of the Montana Public Service Commission. http://www.psc.state.mt.us/browe.htm )

“New whine in old bottles.”

Beyond doubt, the entire telecoms industry is desperate for some measure of policy predictability.

Beyond doubt, the FCC’s Triennial Review order, when it is issued, will be appealed.

Beyond doubt, telecom policy is at this moment becoming more rather than less politicized, acrimonious and divisive.
(New FCC Commissioner Adelstein, who tries to see all glasses as half full, recently said it was a good time to join the FCC. Things could only get better. This would be a good time to prove him a wild-eyed realist.)

How can a measure of predictability be achieved as orders-not-yet-issued are fought over and squadrons of lobbyists and battalions of lawyers are deployed?
How will industry participants cooperate and compete with one another (as required in a networked world) and with regulators on implementation?

“Ongoing trench warfare on UNEs at state PUCs.”
– A battle-scarred CLEC advisor.

How can both the granularity required by the courts and the efficiency of harmonized decisions be achieved within the federalist structure of the Telecom Act?

State commissions, the FCC, and parties must move quickly to identify key elements of the decisions which will be required, efficient processes for making those decisions, and – perhaps especially – ways to minimize regulatory transaction costs while making appropriate market-specific decisions.

There are a variety of models for collaborative or coordinated analysis which can inform and make more efficient the granular decisions that apparently will be required. Love the FCC’s decision or hate it, it’s time to put away the pikes and atlatls, declare a “cold peace,” and focus on making the framework outlined by the FCC work.

“New rules for old wires.”

Like the French at the Maginot Line, parts of the industry may be too focused on trench war, only to risk being overrun by swift tanks.

The UNE battle is a fight over rules for sharing existing facilities. That regime will likely be most relevant for only several years. During that time, cable and wireless and other competitors will continue to build facilities and sign up customers for increasingly rich suites of services. In particular, telecoms providers (of all acronyms) face a potential digital flanking sweep. They need to move forward on Internet questions, those driven by Voice over Internet Protocol specifically and by other hardware, software, and applications issues. The originally over-hyped and then long-anticipated platform competition may finally begin to materialize during the UNEP transition. Over the period that matters most (the economists’ “long run”) the terms of that engagement will be much more important than is the current regulatory Somme.

Investor concerns are powerful for the $15 billion annual revenue CLEC industry, the $118 billion ILEC industry, and upstream vendors all. This is a real constraint on investment and even on operations, and clearly adds passion to the policy advocacy on both sides. Yet given where we are, might investor concerns be addressed better by “constructive engagement,” as suggested by this correspondent, rather than through a continuation of litigation and politics as “war by other means”?

CLECs need to use this period to win customers, move them to their own facilities, and provide them compelling new services in addition to attractive prices for more traditional voice-related services.

Similarly, ILEC networks, with long-time paying customers at the end of millions of lines, continue to be enormously valuable assets. Does it make sense not to invest aggressively in these networks, to build much stronger levels of customer satisfaction, and to provide a wider array of valuable and potentially lucrative services?

For the noncombatants – the customers – aren’t services, value, and satisfaction really what the Telewars are all about?