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.”

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