Two years after Congress opened the floodgates oftelecommunications competition by enacting the Telecommunications Reform Act of 1996, theact's intended results are beginning to flow in a steady stream. If given the necessarypatience and time, that stream -- fed by the initial successes of facilities-basedcompetitors like Cox Communications Inc. -- will swell into the river of competitionenvisioned by the act.
Granted, the act's fundamental tenet -- that the best formof telecommunications regulation is a free and competitive marketplace -- hasn't beenfully realized. Facilities-based competitors have had to swim upstream against theobstructionist tide of the regional Bell operating companies and other incumbent localphone providers, which have forced the early round of competition to be waged in thecourts, instead of in the marketplace. In fact, the RBOCs and GTE Corp. have sued to blockvirtually every order issued by a federal or state regulatory body implementing localcompetition.
Despite these challenges, and despite the pessimistic,vocal few who say that the act is a failure, Cox and other facilities-based providers aredelivering on the promise of local competition. Even before the act was signed into law,Cox was aggressively preparing to offer new digital television, telephone andhigh-speed-data services over our own networks. We've spent more than $2 billion to laythousands of miles of fiber optics, to install switches and to create integratednetwork-information systems that support billing collection, database management and allother aspects of customer care.
Cox customers in two markets -- Orange County, Calif., andOmaha, Neb. -- now have a less expensive, digital, reliable alternative for residentialphone service. In the next 18 months, we plan to expand Cox Digital Telephone into theremainder of our eight major markets, which account for more than 80 percent of our 3.3million customers. We're also providing telecommunications services to business customersin three markets. Eventually, our residential and commercial services will be available innine states.
Digital phone service is only one piece of our competitivepackage of products primed by the Telecom Act. Our Orange County system recently becamethe first cable operation in the nation to deliver the complete package of local andlong-distance phone service, digital and analog cable and high-speed Internet access, allvia a single hybrid fiber-coaxial network. We're now aggressively replicating thatfull-service package of services in our other major markets.
How are customers responding? Beyond our wildestexpectations. For instance, in those areas where we've marketed our residential phoneservice for at least two months, we've achieved 17 percent penetration. Such anenthusiastic early response proves that when given the opportunity, the marketplace works,and customers will vote time and time again for the choice of better and less expensiveservices.
Some naysayers are already calling for a rewrite of the actbecause competition isn't yet flowing like a river. To do so would only diminish thesesignificant early signs of success, retard access to capital, slow the flow of networkupgrades and further muddy the competitive stream just as it's beginning to clear up andbuild force.
The first version of the 1996 Act was introduced in 1992.It took Congress four years to change the wording of the Communications Act to enable thepossibility of competition. To expect the marketplace to find the capital, build out thenetworks and market the new services in less time than it took to write the act is notonly unrealistic: It's utterly ridiculous.
I am both encouraged and distressed by the comparison ofthis current competitive situation with the struggle to introduce long-distancecompetition that began in the early 1970s. I'm encouraged because, as we all know,competition in the long-distance business was finally realized, and consumers now havelots of long-distance choices. On the other hand, true competition came only after nearlya decade of bitter wrangling in the courts. In fact, MCI Communications Corp. was forcedto become virtually a company of attorneys as it fought AT&T Corp.'s aggressiveattempts to block fair competition.
I'm hopeful that today's fight for fair competition won'tbe battled for years in the courts. My confidence is built on a strong belief that theTelecom Act is sound policy and on the certain knowledge that new technology and anentrepreneurial spirit are strong, unstoppable forces in the marketplace.
Competition in local telecommunications has been dammed upfor more than three decades, but the 1996 Act successfully opened the floodgates. If weallow the act's straightforward requirements for competitive interconnection the necessarytime to take hold, today's stream of competition will grow into tomorrow's mighty river ofbetter service, more choices and greater value for American consumers.
Jim Robbins is president and CEO of Cox Communications Inc.