FCC Drops the Ball on Phone Competition – Again

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Richard Morrison, 202.331.2273


<?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Washington, D.C., December 15, 2004—The Federal Communications Commission, in an order issued today, continued to maintain a blind eye to real competition in telecommunications. While the complete rules will be issued later, this adopted order – basically a summary of the forthcoming rules – maintains “open access” regulations which ignore marketplace realities.


The market for business communications services remains highly regulated despite the high level of competition. The expected rules all but ensure that most markets will continue to be judged insufficiently competitive, allowing carriers to operate under government price controls. The D.C. Circuit Court of Appeals found that the FCC’s impairment standard cannot continue to ignore market options like wireless and cable, yet the adopted order did not mention – nor do the rules seem to recognize – that such competition exists.


“This is the fourth time in eight years that the FCC has attempted to craft rules for network access, yet this ruling is likely to create more uncertainty and lawsuits for the industry,” said Braden Cox, technology counsel with the Competitive Enterprise Institute. “While there was some small reform of access rules for providers who are merely resellers, the Commission still hasn’t embraced the market alternatives available, leaving a narrow and misleading picture of the overall telecom marketplace”


For more information on the future of FCC competition policy, read the new CEI study by Stephen Pociask: Wireless Substitution and Competition: Different Technology but Similar Service – Redefining the Role of Telecommunications Regulation, available online at http://www.cei.org/pdf/4329.pdf.