Universal Service To Universal Access
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DEREGULATION OF THE LOCAL TELEPHONE MARKET
Opening local phone and cable industries to vigorous competition will have a great long-term positive impact on high tech. This is especially true for America's PC industry, a world leader whose ever-more powerful machines operate over the narrowband copper phone wires and unswitched TV cables of regulated monopolies. Competition in local loops will drive investment in broadband switching networks. Additionally, state public utility commissions should complement federal reform by setting ISDN rates at POTS prices so that ISDN can serve as a bridge between narrow and broadband lines. Exploding Internet use is driving demand for ISDN lines and getting them should become inexpensive, fast and easy.
-- Michael C. Mailbach in Upside, December 1995Independent of federal action, many states have moved to allow competition in the local loop and more will follow in an inexorable march towards ending monopolistic control of local telephone service (see Table 10). Some consumer groups have voiced strong opposition to pending Federal Legislation that would prevent state and federal regulators from using rate of return regulation to set prices for local telephone service. The International Communications Association warns that this and even the proposed price caps, could cost consumers as much as $14 billion a year by awarding most of the benefits of technological change to telephone companies until a transition to a competitive market is complete.
Table 10: State Regulatory Commission Treatment of Competition
in Switched Local Service (as of September 1, 1995)
Competition is Allowed, Rules are in Place Competition is Allowed, Rules are Not Yet in Place Allowing Competition Under Consideration Allowing Competition Not Being Considered Firms are actively competing IL, MI, NY, WA Firms have been approved for operation CT, MD, MA, NC AZ, OH, TN, UT Firms have applied for certification CA, GA, TX AL, FL, IA, OR, WI KS, NJ, PA No statutory or generic regulatory barrier CO, HI, ID, MN, NH, NM, NV, RI, SD, VA, WY IN, ME, NE, OK, SC, VT, WV DE, MT, ND Generic policy or order is barrier AK, MS Statutory barrier DC, KY (1) AR, LA, MO
(Source : FCC Common Carrier Competition report, Fall 1995)
(Note: (1) Kentucky Public Service Commission indicates they belong one category higher up on this table, having currently a regulatory barrier, not a statutory barrier to competition.)The glut of advertising from telcos seeking long distance customers will accelerate as they and other market entrants move to active competition for local service customers. Public and private telephone company advertising is already showing strong gains up 17.5% for the first half of 1995 to $762 million while cellular radio and phone system advertising surged 50.3% for the first half of 1995 to $141.5 million. (Source : Competitive Media Reporting)
As Local Exchange Carriers (LECs) downsize staffing to prepare for local telephone loop competition, service problems have seemingly increased in areas such as delayed installations, missing repair commitments and billing problems. Of 27 states reporting LEC staff reductions, 24 indicated an increase in service quality complaints (see Table 11). An upcoming NARUC study plans to recommend benchmark service levels, though it will be up to the individual state Public Utility Commissions whether to adopt them and how to monitor and enforce them. The importance of service quality versus lowest cost to consumers has yet to be determined in the local telephone market, but the immediate connection for customers of cellular and other wireless loop solutions may yet prove an advantage over waiting for conventionally wired service.
Table 11: Local Exchange Carriers Under Investigation for Service Quality Problems
LECs Under Investigation for Questionable Service Quality State Public Utility Commissions Involved Ameritech IL, OH GTE AK, HA, MO, NC NYNEX NH (Informal Investigation), NY, RI US West AZ, CO, ID, IO, MN, NE, OR, SD, UT, WA
(Source: Preliminary Survey Results - National Association of Regulatory Utility Commissioners,11/95) The FCC assists consumers in resolving a wide variety of problems. The three most common types of complaints accounted for more than half of the estimated 21,000 received in 1994. These top three categories were: "800" calls where the initial "free call" turned into a billable call, operator service company practices and rates, and unauthorized switching of long distance service ("slamming"). The FCC is starting to compile a periodic Carrier Performance Scorecard to enhance consumer awareness of common telecommunications problems and the carriers most prone to them.
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