Industry, Consumer Advocates Debate Need for Telecom Regulation

But on all 3 panels the usual disputes erupted, such as between ILECs and CLECs. And, when N.J. Comr. Connie Hughes asked for definitions of competition she heard as many descriptions as there were panel members. “I'm distressed that we are still fighting over the basics,” said Comr. Connie Murray of the Mo. PSC.

The debates were sponsored by state regulators Chuck Davidson of the Fla. PSC and Susan Kennedy of the Cal. PUC. The two have been active in the Federation for Economically Rational Utility Policy (FERUP), a group of reform-minded state commissioners. Kennedy and NARUC Pres. Diane Munns of the Ia. Utilities Board said too many meetings are little more than a series of “talking heads.” The debates sought real ideas, they said. Participants had to keep their comments under 2 minutes and answer questions from separate panels of state regulators who then tried to summarize what was learned.

Participants debated how many competitors a market had to have to be defined as “competitive.” Consumer Federation of America Research Dir. Mark Cooper said at least 4, but 6 was better. Don Jackson of Tri County, a rural Wyo. ILEC, said 3 was the minimum. Tom Hazlett of the Manhattan Institute said the question shouldn’t be “Is there enough competition?” but rather “Is government help needed?” Hazlett recommended examining “what regulations do for us. In cable TV, rate regulation was a disaster” and did nothing for consumers, he said.

Asked by Hughes to define competition, AARP’s Debra Berlyn said it’s when consumers have “real choices,” not just choices between providers all owned by the same company, such as Verizon and Verizon Wireless. Competition means more than 2 providers, said NARUC Gen. Counsel Brad Ramsay. It’s when consumers are “sovereign,” said Jim Conran of the consumer group Consumers First. Three competitors provide “real choice,” said Sprint Vp Charles Rehwinkle. It’s when “you really can switch over and there aren’t huge hurdles,” said NCTA’s Rick Cimerman.

Several participants said regulation should aim to “empower” consumers, making sure people aren’t constrained from using their technology as they wish. “I'd ask not what regulations are needed or what the market might look like, but I'd start with what are consumers not getting,” said SBC’s Dorothy Attwood. Cooper disputed Attwood’s comment that consumers are starting to drive technology, customizing services. “If the consumer is the driver, I'd like to see naked DSL but you make me buy voice” to get the DSL, Cooper told Attwood.

Jackson said the goal should be consumer protection and most panelists agreed, but Cooper noted that definitions of consumer protection vary. “Consumers want cable access and are not getting it,” he said. Cimerman said he was surprised at the debaters’ emphasis on cable open access, since he felt it no longer was an issue. Progress & Freedom Foundation Fellow Randy May said few disagree on enhancing consumer welfare, but regulators should weigh such protections against their cost, which can outweigh the resulting benefit and, May noted, rarely gets forethought. Steve Zipperstein of Verizon Wireless said an example of May’s point would be requiring companies like his to offer instructions in more than 2 languages -- English or Spanish -- to callers, a costly step consumers haven’t sought. “It’s that kind of top down, government imposing its self between the company and the consumer that should be avoided.”

Cimerman said regulators should focus “on wholesale rather than retail” because end user prices and other retail issues need less oversight, than social issues such as 911 service excepted. Wholesale service needs oversight because there isn’t the “same level of competition,” he said.

On state versus federal regulation, Zipperstein warned “too much state regulation “poses danger to innovation.” Zipperstein said he wasn’t advocating “wholesale preemption of the states,” just a balance between state and federal. NARUC’s Ramsay urged shared responsibility, with the federal govt. setting minimum requirements and states having the option to add to them. The interconnection model is a good one, with states enforcing network access, said Ramsay. May said that model might work well in areas such as universal service. Both state and federal regulators need to recognize that the industry is becoming more competitive, May said: “Now there is a presumption in favor of regulation. There needs to be a presumption in favor of deregulation.”

Legg Mason analyst Blair Levin, a moderator, asked which single thing panelists would like to get out of a Telecom Act rewrite. Among the answers: (1) Qwest’s Larry Sarjeant picked elimination of the Act’s Sec. 251 interconnection rules, leaving only the general requirement to interconnect. (2) MCI’s Carl Giesy chose spectrum reform, freeing more spectrum to provide a wireless broadband option. (3) Cimerman said he’s like to see limits on municipalities’ ability “to charge above- cost rights of way fees.” (4) Pulver’s Jonathan Askin voted for “network freedom rules and a program to encourage broadband development.

The debates were to occur at FCC hq, with some staffers on panels. However, in light of Chmn. Martin’s temporary hold on FCC activities, the event moved to Capitol Hill, and involved no FCC officials. Some state commissioners noted privately that FCC staffers also have stopped participating in NARUC’s intercarrier compensation talks.