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Breaking Up's Still Hard to Do

3/14/2009 2:00 AM Eastern

Hey, it worked 25 years ago when Ma Bell had a monopoly on the phone line.

Any number of firebrand telecom experts would like to see it happen again — or at least see a real common carrier again, from which independent Internet-service providers could spring.

New York-area veterans of the telecom wars gathered in Greenwich Village last Friday night, not to praise Ma Bell but to lament what's happened since it was broken into Baby Bells that later congealed into AT&T and Verizon.

Forget about savings to consumers. It's been a long time, of course, and inflation has ensued. But seminar organizer Bruce Kushnick (a thorn in the Bells' side for years) said the cost of Bell local phone service is up 542% since the bust-up and long-distance calls cost more to make on Verizon than they did in 1980.

“The financial-services market isn't the only regulatory failure,” Kushnick said.

His analysis ignores competitive alternatives to the Bells, for phone service, but he has chronicled the Bells' slowness to compete on other fronts. He figures phone companies should have 117 million TV-enabled homes by now, based on promised upgrades in exchange for higher rates. Instead of a combined 3.2 million customers for Verizon's FiOS TV and AT&T's U-verse.

“I've begun to give up on competition,” said Mark Cooper, director of research at the Consumer Federation of America, a common refrain.

“Market fundamentalism” failed in the airline industry and in telecommunications, it's created a cozy duopoly between Verizon/AT&T and cable operators, dribbling out higher Internet speeds at higher prices, Cooper said.

Cable doesn't have to offer competing ISPs access to its cable-modem platform, and Verizon doesn't have to open its FiOS fiber network to competitors.

“Now, we have neither regulation nor competition,” he said.

There was a fair amount of lusting over what FiOS Internet will deliver in New York City, when it rolls out. Dave Burstein, editor and publisher of DSL Prime, said the FiOS network will be capable of offering 200 Megabits per second, and Time Warner Cable will be at 50 Mbps (or more, via DOCSIS 3.0). If only independent ISPs could tap some of that.

“The logic of the divestiture was exactly right and we have to get back to it,” Cooper said. In a situation where there are fewer than six access lines into the home, he said, that big access line needs to be regulated and opened. Then competition will really bloom.

“Where ISPs have access to a reasonable amount of bandwidth, there will be immense innovation in that space that will discipline the Verizons of the world,” Cooper opined.

One such hopeful recipient would be Joe Plotkin from independent ISP Bway.net.

His firm, which resells digital-subscriber-line service via Covad, is bound to lose customers to FiOS Internet, based on speed and expected pricing, he said.

Seems like the independents will be the ones that keep getting broken. Not AT&T.

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