News

Tristani: Cable Still Best Telephony Competitor

5/10/1998 8:00 PM Eastern

Atlanta -- Despite the failings of the 1996
Telecommunications Act, cable remains the best hope for bringing competition to the
residential telephone market, a top federal regulator told attendees at the National Show
here last week.

Speaking to state regulators celebrating the act's
second anniversary, commissioner Gloria Tristani of the Federal Communications Commission
said consumers had been led to believe that a "new world of competition was being
restrained only by outdated laws."

Instead, she said, the 1996 act accelerated competition for
business accounts, which historically pay more for phone service and are therefore more
willing to live with "speed bumps that go with a new competitive market."

"However, residential consumers are mostly seeing the
speed pumps, but no competition," Tristani said.

But there is evidence that cable operators are leading the
charge to bring competition to the residential market, she said.

Cablevision Systems Corp. expects to offer local service to
200,000 homes on Long Island, N.Y., by year's end, while MediaOne has launched local
phone service in Omaha, Neb.; Atlanta; and Los Angeles, she said.

"These companies are showing themselves, Wall Street
and the rest of the industry that there is a real business opportunity out there,"
she said. "You [cable operators] are in the enviable position of already having the
piece of the telephone network that is most difficult to replicate -- the last mile to the
customer."

Tristani said existing infrastructure -- which allows for
delivering service at lower rates -- and the ability to provide one-stop shopping for
telecommunications services will pry market share away from the telcos.

However, Don Mason, a member of the Public Utilities
Commission of Ohio, warned that competition in the business market may not be good for
residential ratepayers.

As a local telco loses high-dollar business customers, it
may seek to recoup its losses from residential consumers, he said.

"We would be doing a serious disservice to all of us,
forcing PUCs [public utility commissions] into more regulation, if competition in the
business markets ends up raising residential rates," Mason said.

Meanwhile, some state regulators reported already taking
steps to ensure a level playing field between a telco and the state's cable
operators.

David Svanda, a member of the Michigan Public Service
Commission, said the agency gave competition a boost when it struck down an Ameritech
Corp. marketing plan that offered discounts on local phone service to consumers who signed
up for Ameritech New Media's cable offering.

September