ALTS Announces Legislative Agenda for 107TH Congress; Telecom Act Needs to be Strengthened, According to ALTS Chairman Taylor.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Feb. 8, 2001

In order to achieve full and effective local telephone competition, the 1996 Telecommunications Act should be strengthened to knock down the remaining barriers to competition, according to the Association for Local Telecommunications Services.

At a press conference today, the date of the 5th Anniversary of the Telecommunications Act of 1996, Bob Taylor, ALTS Chairman and CEO of Focal Communications thanked Congress for passing this monumental piece of legislation.

"Congress showed tremendous vision by passing the 1996 Act. That legislation launched America into the 21st Century by promoting competition across all sectors of our telecom economy," he said. "Because of that Act, America has reasserted its dominant position as the world leader in information technology.

"Competitors have built the networks that are the foundation of our New Economy," continued Taylor. "Our country's longest economic expansion in history is due, in part, to the growing investment in advanced broadband technologies and the Internet. This incredible investment was triggered by the 1996 Telecom Act."

Nevertheless, ALTS pointed out that many consumers have not yet seen the benefits of competition. Although competitors have doubled their market share each year since the 1996 Act, competitors have only 8% of the local market today.

"Congress needs to put more enforcement teeth into what is otherwise a good Act," said ALTS President John D. Windhausen, Jr. "Congress clearly had the right idea when it passed this historic piece of legislation. But having the benefit of five years' experience with the Act, we now know that there are still barriers to competition in local telecommunications markets."

While the Telecom Act dramatically accelerated competition and brought many benefits to consumers, the industry is now at a crossroads, Windhausen said, with the incumbent local exchange companies still controlling about 92 percent of the local telephone market. "With that kind of market share in the hands of the original monopoly, no one could seriously contend that we have fully effective local competition," Windhausen said. "In addition, competitive carriers have suffered in the recent market downturn. Stock prices of public CLECs are down about 73 percent since the beginning of 2000. At the same time, the Bell companies have grown stronger by consolidating their assets through mega-mergers."

"CLECs are especially vulnerable to legislation that would impede competition," added Taylor. "Congress should recommit itself to eliminating barriers to competition and should not weaken or kill competitive companies by enacting legislation to make monopolies stronger."

Windhausen said ALTS will encourage Congress to focus on three areas. First, Congress should ensure that the 1996 Telecom Act is vigorously enforced. "Despite numerous federal and state orders requiring the ILECs to open their networks to competition, they simply haven't done it," Windhausen said. "The phone companies need to see that opening their networks to competitors is not voluntary, it is a must." He said Congress should consider automatic penalties on the ILECs for failing to comply with the Telecom Act. If that does not work, Congress should consider splitting the Bell Companies into separate wholesale/retail units.

Second, municipal governments often create another barrier to competition, Windhausen said. "Many cities make competitors' business plans untenable by imposing enormous franchise fees and onerous regulations that are unnecessary and unwise," he said. "Congress needs to speed up the approval process and require cities to treat all telecom companies in a non-discriminatory manner."

Third, building owners can restrict tenants' choices for telecommunications services. "All too often, landlords give tenants only one choice," Windhausen said, "and that choice is the incumbent. We want to ensure that if you are a tenant in a multi-tenant building - either residential or business - you are allowed to choose whichever provider you wish."

ALTS also noted that it would work with Members of Congress on a variety of other issues to stimulate broadband investment, including tax incentives and loan guarantees for broadband deployment in rural areas, universal service reform, tax credit legislation, and FCC reform. Furthermore, ALTS will continue to oppose legislation to exempt the Bell Companies from their obligation to open their local markets to competition.

Windhausen concluded: "Our message is clear: competition stimulates investment and economic growth. Granting special favors to the old monopolies could undercut the foundation of our New Economy, eliminate hundreds of thousands of jobs, and risk throwing the country into a recession."

ALTS is the leading national industry association whose mission is to promote facilities-based local telecommunications competition. Located in Washington, D.C., the organization was created in 1987 and represents companies that build, own, and operate competitive local networks. For more information on ALTS, visit the ALTS Web site at www.alts.org.