roundtable: Chaos in Creating Telecommunications Reform?

roundtable: Chaos in Creating Telecommunications Reform?

Chaos in Creating Telecommunications Reform?

W. Curtiss Priest (BMSLIB@mitvma.mit.edu)
Tue, 13 Jun 95 08:52:31 EDT 

Message-Id: <9506131254.AA08483@a.cni.org>
Date:         Tue, 13 Jun 95 08:52:31 EDT
From: "W. Curtiss Priest" <BMSLIB@mitvma.mit.edu>
Subject:      Chaos in Creating Telecommunications Reform?
To: Telecommunications Policy Roundtable <ROUNDTABLE@CNI.ORG>


Chaos in Creating Telecommunications Reform?
========================================================================
CITS Observations
W. Curtiss Priest, Director

If there were a subject that I would have wanted the
Congressional Office of Technology Assessment to study,
it would be the area of telecommunications deregulation.

I hear from spokespersons for public interests that
the legislation doesn't protect them.  And, from the
editorial below, it appears that the supporters of
the free market believe it protects so many things as
to completely distort the free market.

I hear that the 2 bills are considered so complex that
many of our elected officials in the House and Senate will
have neither the time nor ability to comprehend the bills
before they vote on them, sealing the fate of the
U.S. telecommunications future.

Those of us on the Telecommunications Policy Roundtable - NE
scramble to understand what is happening in the current
Senate debates, receiving conflicting reports from other
public interest groups about whether to support the current
Senate bill, or not.

Jeff Chester from the Center for Media Education has gone on record saying:
This is a bad bill. it will "set the stage for at least a generation".
The best we can hope for, at the end of the week, is a less bad bill.

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Wall Street Journal
REVIEW & OUTLOOK
Locals' Access
June 8, 1995, p. A12

Locals' Access

"It's an inside-the-Beltway game, a
wise guy's game. "
                    --LARRY IRVING
                    COMMERCE DEPARTMENT

It's a harsh verdict, but after
watching the House Commerce Com-
mittee approve a misshapen telecom-
munications bill, we reluctantly have
to agree with Mr. Irving's assessment.
The once-grand enterprise ot opening
the Information Highway has become
a,wise guy's game.

The recent committee markup was
packed with lobbyists, many of whom
paid $1,000 for their seats by hiring a
student to wait in line for three days to
reserve a spot. The bill that emerged from 
this familiar Beltway bog was
dripping with new restrictions on com-
petition-all of course in the name of
"deregulation." This is what happens
when Republicans forget the Novem-
ber election and start behaving like
the locals.

  The GOP decline on this issue was
put in stark relief with the release of a
study on telecom deregulation last
week by the Progress & Freedom
FoundatioIl. The report, prepared by a
distinguished group of scholars and
welcomed by Speaker Newt Gingrich,
sets a truly radical agenda: Abolish
the FCC and replace it with a smaller
executive branch agency. Get rid of
the Current regulatory hodgepodge,
leaving in place only the Justice De-
partment's antitrust functions. Get
the government out of the spectrum
business by creating "property rights"
on rhe I-Way. Shrink subsidies for the
odficially protected groups down to the
smallest possible level.

  This vision, which combines Re-
publican principles with the realities
of the 21st century marketplace, is
what the GOP should be doing - but
isn't. Oh sure, Congressman Jack
Fields and Senator Larry Pressler-
the chief architects of the Republican
approach-have promised that abol-
ishing the FCC will be the next item on
their agenda. But after a bruising,
months-long battle over this telecom
bill, Congress ls hardly likely to revisit
the subject anytime soon.

  The Fields and Pressler legislation
comes to the Senate floor this week,
and far from phasing out the FCC, it
gives the agency some 80 new regulatory
functions -- all designed, of course,
to ensure "competition" and
"fairness."  By taking this approach,
Republicans have aligned themselves
with the Clintonites' French Bureaucratic
worldview and against teh real
entrepreneurs.
   In fairness, it must be said that the
Republicans' failure of political vision
is matched and made possible by that
of industry. Over and over, telecom
CEOs have told us that all they want to
do is compete without government in-
terference. But when confronted with
a wide-open legislative process, the
temptation seems irresistible to seek
provisions burdening competitors.

The problem here is a familiar
one--the telecom companies lean too
heavily on their "insider" Washington
representatives, whose skill is chisel-
ing arcane special provisions out of an
arcane process. These people are part
of the reason the public is cynical
about Washington. The CEOs know
what's right, but are given to believe
it's never attainable. Consider "uni-
versal service."

Numerous telecom CEOs have told
us how awful this entitlement is: It
distorts market signals. It offers huge
subsidies to recipients who aren't
means-tested. It costs the economy
billions. But every CEO hastily adds:
Of course, we can't oppose universal
service; remember the political reali-
ties.

In short, the imagination that
builds such remarkable private net-
works and products stops at the Capi-
tol steps. Nobody is making the case to
the public against universal service.
Where are the TV commercials point-
ing out that Harry & Louise would be
forced to subsidize telephone service
to their rich neighbor's summer
home? Instead industry Iobbyists and
Republicans have quietly united be-
hind a new universal service entitle-
ment, whose cost, by CBO estimates,
would be $7 billion.

It would be a tragedy if this ap-
proach becomes law -- for all con-
cerned. The telecom industry, which
now represents one-seventh of the
economy, wouldn't create the 2.1 mil-
lion new jobs that real deregulation
would bring by the year 2000. The Re-
publican Party would see its mantle as
the party of new ideas tarnished. And
the American people would be delayed
in receivlng the benefits of full compe-
tition-everythlng from new cable
channels to interactive television to
services not yet imagined.
   Newt Gingrich and Bob Dole have
to get involved to prevent their political
managers from blowing this
chance to deregulate America's
fasting growing industry.  The leadership
should declar:  Enough compromises, already.
Let's get back to the first principles,
with the Progress & Freedom Foundation report an
excellent place to rediscover them.

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