Does Anyone Feel Sorry For The Phone Companies?

Last week, when the Federal Communications Commission (FCC) ruled that local telephone companies would be required to share their wires with rival data providers, the telephone company CEOs let out a collective wail.

“There is no need for corporate welfare that gives one sector of a very competitive industry an unnecessary advantage,” said Bruce Posey, senior vice president of US West.

The FCC’s line-sharing order means that customers who want high-speed data services from a company other than the local phone monopoly won’t have to pay for a second phone line to be installed. It also means that those that have stayed clear of the high-speed Internet business will be able to drive down prices by offering fierce competition to the phone companies.

Faster Deployment

However, the bottom line, according to the FCC, is that the ruling will result in faster deployment of high-speed Internet service to residential areas via digital subscriber line (DSL) technology.

Initially, the ruling appears to be a victory for competitive local exchange providers, or CLECs, such as Covad Communications Group, Inc. and Northpoint Communications Group.

These companies’ customers are currently forced to pay approximately $20 (US$) a month for a second phone line if they want high-speed service, while local phone companies who sell their own DSL service can split existing lines to carry voice and data simultaneously.

Bogus Claims

The FCC’s ruling had been expected, especially because such broadband capacity is needed now more than ever with the tremendous growth in e-commerce and the Internet.

Nonetheless, local telephone companies have been battling against the inevitable for years and complaining bitterly that the FCC’s action could cause interference with their voice services.

After listening to these claims, it seems to me that the phone companies have a case of collective amnesia. The reason they hold title to so many miles of copper cable is because they enjoyed the privileges of being a government-sanctioned monopoly for years – and the result was that the consumer footed the bill by paying artificially high rates for telephone service.

Before the FCC’s ruling, these same consumers were forced to buy high-speed Internet service from the same local phone companies, because the local companies’ bogus claims to millions of miles of copper wire had effectively shut out any competition.

Precursor To Opening Up Cable Access

While the phone companies continue to bitch and moan in their defeat, I only hope that cable companies learn a lesson from their mistakes.

Instead of fighting to block the inevitable and rightful access to millions of miles of consumer cable, they should sit down with their rivals now and work out a deal to share access, rather than waiting for the FCC to do it for them.

What do you think? Let’s talk about it.

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