Give Consumers Choices By Ending Bell Monopolies
OVER the next few weeks the United States Senate will vote on a bill that will forever change the laws that govern the nation's telecommunications industry.
The bill, recently passed by the Senate Commerce Committee, is designed to break up the monopoly control that the seven Regional Bell Companies have over the local telephone market. Yet changes are needed in the legislation to ensure that it gives consumers real choice and brings real competition to all telephone markets. (The House of Representatives is expected to hold hearings and committee votes by the end of May on its own version of telecommunications reform legislation.)
If Congress passes legislation that opens up local telephone markets to competition -- ending the Bell monopolies and giving consumers a choice among competing providers of local telephone service -- everyone will benefit. But if Congress allows local telephone companies to enter already competitive markets, such as long distance, with their monopoly power intact, they could control prices, services, and access to customers.
This would allow them to drive competitors unfairly from both the local and long distance markets, leaving consumers with fewer choices.
In long-distance telephone markets, an explosion of competition has occurred in the 11 years since the court-ordered divestiture of the Bell System in 1984. More than 500 long-distance companies now compete in that market everyday, and everyone has benefited from this competition. Consumers' long-distance rates have dropped almost 70 percent in real dollars since 1984 and long-distance companies have become better businesses as a result of this fierce, but fair, competition, providing more and better services.
In local markets, the opposite is true. Competition is missing from these markets, which are controlled by the Bell companies. Consumers still have no real choice when it comes to local telephone service, for which rates have gone up.
The Bell Companies have asked Congress to let them into the long-distance market, but they do not want Congress to open their monopoly local markets to real competition. That is reminiscent of the old line ''What's mine is mine and what's yours is negotiable.'' Whereas a Bell company could compete in long-distance markets right away, it could be years before the Bell Companies face meaningful competition in the local markets.
The Senate bill lists several conditions the Bells would have to meet before entering long-distance markets, such as providing for dialing parity (so consumers dial the same number of digits to reach someone no matter which telephone company handles the call) and number portability (so consumers keep the same telephone number when they choose a new telephone company). But these need to be strengthened and they need a strong enforcement mechanism to ensure that local competition is real.
There needs to be a referee to make sure everyone plays by the rules during the transition period to local competition. The Justice Department is the government agency primarily responsible for antitrust enforcement, and its role in the Bell System divestiture and other matters has given it decades of expertise in telecommunications issues. It is uniquely situated to evaluate market conditions and to ensure that the Bell companies have competition in their markets.
The Senate bill is only the first step in a long legislative process. As Congress continues its work on the first major rewrite of communications policy in 60 years, the question that should drive Congressional debate is not whether we should have at least a second choice for local service. As chairman of the Competitive Long Distance Coalition, I speak for more than 500 long distance companies that have provided American consumers with so many benefits in the past decade. We want to work with both the House and the Senate on a bill that will give consumers real choice and local telephone monopolies real competition.
