A month or so ago
Telecommunications Policy published my article entitled The Mixed Blessing of a Deregulatory Endpoint for the Public Switched Telephone
Network. At the time of publication
I did not have the insights and clarity of purpose provided by AT&T’s bold
initiative to couple a substantial increase in capital expenditure with the elimination
of regulation. See http://www.att.com/Common/about_us/files/pdf/fcc_filing.pdf.
The
quid pro quo that AT&T proposes surely will come across as reasonable if
not generous to the uninformed and the purposefully ignorant legislator. To be clear AT&T must upgrade its network
in recognition that basic voice revenues—wireline and wireless—will decline substantially. Why not leverage such necessary investment in
exchange for a Christmas wish list of deregulatory—make that unregulatory—goals?
AT&T
couches its proposal as the progressive and timely replacement of copper-based
telephone technology (Time Division Multiplexing) with a wireless-friendly and
Internet-based standard. Of course we should
applaud new “sunk” investment in infrastructure and yes an Internet Protocol
standard efficiently promotes technological and marketplace convergence. But as I stated in the article there is more to
this initiative than AT&T benevolence and competitive necessity.
It
has become clear to me that AT&T seeks to leverage “spade ready,” “job
creating” investment for the following financial benefits:
1) elimination
of hundreds of thousands of jobs many of which are currently filled by union employees;
2) billions
of dollars in avoided tax liability generated by the coupling of new capital investment and the write off of most
copper and obsolete switch assets that have artificially
elevated values which, over the years, have rewarded AT&T and other incumbent wireline incumbents with excessive
rates of return and universal service subsidies;
and
3) the
replacement of common carrier regulated telecommunications services with a blend of mostly unregulated information
services with a few residual telecommunications services, such as basic wireless voice treated as common carriage,
but subject to “streamlined” regulation.
Only
in this purposefully ignorant and politicized environment can AT&T and
other incumbents condition essential and commercially necessary change with
regulatory changes that eliminate still needed safeguards. Do we honestly think the migration from
wireline service, backed up by carrier of last resort duties, to wireless
service, with no geographical service mandates and rate oversight, will have no
adverse impact of the current price, quality of service, availability,
reliability, consumer protection and the public interest safeguards available
to wireline consumers? Didn’t AT&T
claim that chronic spectrum shortages would prevent it from providing reliable
service, or what that a red herring (or lie) to support its acquisition of
T-Mobile?
More
fundamentally, does a change in baseline technology and medium eliminate the
need for government oversight? Exactly
what does this shift do to the level of marketplace competition in basic and
enhanced services?
