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Bells To Pitch Their Point

Incumbent telephone companies, the four Baby Bells, have had a tough time trying to convince legislators and the general public to their plight in deploying high-speed Internet services to the masses in 2001.

At a meeting brokered by the Technology Advocates of San Antonio Wednesday, representatives from Verizon Communications and SBC Communications will tell their side of the story and try to sway the opinion of anyone who will listen.

The Internet Freedom and Broadband Deployment Act of 2001, H.R. 1542, is a bill sponsored by Reps. Billy Tauzin (R-La.), and John Dingell (D-Mich.), both ex officio members of the House subcommittee on telecommunications and the Internet.

The two sponsors have been broadly lambasted by advocates and the press for pushing a bill that no one except the telephone companies seem to think will improve conditions in the broadband provisioning arena. Digital subscriber line (DSL) technology, once considered manna for a bandwidth-hungry nation of Web surfers, has faltered in the past couple years.

The Bells think removing many of the conditions imposed by the Telecommunications Act of 1996 will give them financial incentive to deploy remote terminals and DSL access multiplexers (DSLAMs) to underserved, poor and rural areas of their coverage area.

Their inability to convince lawmakers has even forced them to seek allies in the most unlikely of places the cable networks. Hoping the increased consolidation within the cable community will force regulators to rethink current legislation, Bells executives have been quietly applauding mergers like AT&T Broadband and Comcast .

Advocates and Internet service providers (ISPs) point to instances of foot-dragging and the recent success of Verizon and BellSouth in meeting their DSL deployment projections for 2001. Analysts maintain the Tauzin-Dingell bill would also open up the long-distance telephone service market to the Bells while shutting down avenues of competition for independent providers.

Speaking on behalf of advocates at the forum next week is Randy Pulman, a telecommunications lawyer from Stumpf, Craddock, Massey & Pulman, P.C., and Gwen Rowling from the Southwest Competitive Telecommunications Association.

Pulman, who's firm is located in San Antonio along with SBC headquarters, points out the problems associated with broadband deployment have little to do with the current regulations and a lot to do with opening up their coverage areas to provide long-distance services to their customers.

A provision of the Telco Act allows the Bells to offer the service only after proving they've opened their markets up to the competition. One of the main contentions of the four incumbent's has been they need long-distance telephone services approval (section 271 certification of the Telco Act) with the Federal Communications Commission, he said, to help speed their broadband deployment.

That's is a faulty argument, Pulman said, and one the Bell's have been unable to prove.

"The bottom line is Tauzin-Dingell is completely unnecessary for the purpose the Bells are pushing," he said. " 'Give us inter-LATA (local access and transport area) relief and we will deploy in high-cost urban and rural areas.' That's a very lofty goal, and I'm sure it makes some sense to them at first blush, but the fact of the matter is (SBC ) has had 271 relief for the past one-and-a-half, two years and I don't think that there's been any more DSL deployment in the barrio of west San Antonio

"The proof is in the pudding," he continued. "(SBC) already has 271relief in Texas and has for more than one-and-a-half years and I don't think that it's made any difference. I don't think I've seen any DSL deployment in the barrio in west San Antonio since they had 271 relief, but that's the story that the Bell's are trying to spin."

In related news

Regardless of who's right or wrong, the effects of the current telco regulation have left the high-speed market in a tailspin, with scores of providers going out of business and equipment makers dramatically scaling back their production (resulting in job losses and tattered financial sheets).

According to the Yankee Group, a high-tech sector analysis firm, any change in the environment is a good one for DSL equipment manufacturers like Alcatel , Cisco Systems, Inc. , and Lucent Technologies .

If the Bells and Tauzin-Dingell manage to push the Broadband Bill through Congress, equipment makers win. If advocates force the Bells to open up, they also win.

The only thing equipment makers have to fear are their peers. Matt Davis, a Yankee Group program manager, said increasing competition in a declining market will either ruin companies or force them outside the U.S.

"While the U.S. market continues to be one of the most important regions for DSL equipment providers, the oversupply in the market has compelled vendors to look for fertile grounds all over the world," he said. "The European, Latin American, and Asia-Pacific regions have stimulated DSL shipments, and development is occurring in different regions on different timetables."