In my own words
Economic Stimulus: Grow the economy, not the Bell monopoly
Dec. 9, 2001
Small business is all for capitalism and free markets, but when government is used to kneecap the small guy and competition, that's when we get annoyed.
We haven't asked for government handouts in the name of stimulating the economy, but four giant companies are using their political muscle right now to push through legislation that would further serve to delay investment, and the modernization of our telecommunications infrastructure. Not a good move for a hurting economy.
The quartet of regional phone monopolies n Verizon, SBC, BellSouth and Qwest/U.S. West are putting on a full-court press for their special legislation. Unfortunately, the effect would kill off what's left of the competition in the once thriving American telecom industry. Thousands of additional jobs will be lost. It would also advance the extension of the Bell monopoly in local service to broadband Internet services and perhaps even long distance.
The last thing America needs right now is re-monopolization of the entire telecom market. The four existing Bell companies could essentially form four regional versions of the old Bell System monopoly.
Verizon Communications Chairman CEO Charles Lee seems perfectly happy with that outcome. He recently stated before a group of business people in Boston, "the world doesn't need 25 major telecommunications companies." Mr. Lee surmised that "four, five or six global telecommunications companies" would really only be necessary to meet the world's future needs.
Snuffing out competition using the levers of government and the legal system is no way to stimulate competition and the economy, but that's been the Bell agenda for five years. They have used their considerable power to thwart implementation of the Telecom Act of 1996, which requires them to cooperate with the opening of their monopoly local service markets to competition.
Already, nearly 20,000 jobs have been lost in the competitive side of the industry, made up by small and medium-sized businesses. More job losses are on the way if the Bells get their way.
The legislation the Bells are lobbying furiously to pass is commonly known as the Tauzin-Dingell Bill, for its chief sponsors in the House of Representatives. The bill would, in effect, reward the four Bells for obstructing the law. It would officially strip away the market opening requirements of the Telecom Act, especially in the area of broadband DSL services that are becoming increasingly important to the growth of small business.
When the Telecom Act was passed, small business owners looked forward to having a competitive choice for broadband or high-speed Internet service. We looked forward to a dynamic and competitive broadband market that would deliver the benefits of expanded choice and lower prices.
Instead, just the opposite has occurred. Prices for broadband service are going up instead of down as the Bells tighten their monopoly grip in the telecom market. Competition never developed beyond the token level because the Bells spent millions on political lobbying and nuisance lawsuits to keep Congress and state commissions from enforcing the Telecom Act.
The Act requires the Bells to cooperate by leasing wholesale broadband capacity on their local networks to new competitors at reasonable discount rates, the same approach that worked so well in introducing competition to the U.S. long distance market. But the Bells have instead charged exorbitant wholesale rates and consistently bungled service orders from potential competitors, driving smaller competitors out of business.
As a result, the Bells still control well over 90 percent of the local residential phone service market and they have grabbled 75 percent of the market for broadband service delivered over telephone lines. Their success in keeping their markets closed to competition has killed growth in the telecom market and handicapped small businesses that depend on efficient, affordable broadband service.
With the tally of lost jobs in the telecom industry approaching 300,000 and the U.S. economy now officially in decline, the Bells should be thinking of ways to help their industry thrive. Congress should tell them to stop looking for special favors like Tauzin-Dingell, and start competing by complying with the law, which in turn will help all businesses get moving again.
Karen Kerrigan chairs the Small Business Survival Committee, a nonprofit, nonpartisan advocacy and lobbying organization based in Washington, D.C. For more information, visit SBSC online at www.sbsc.org.