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Ding dong, the monopoly is dead.

Change. It's as American as apple pie. We thrive on it, yet we complain bitterly about how it keeps our lives in constant turmoil.

If you think change in your personal life is traumatic, just be glad you're not a telco, especially a Bell operating company. After over 100 years of unbridled dominance in the local exchange network, the era of local loop competition dawns.

The Monopoly is Dead. Well, almost.

Recent announcements by several telephone operating groups tell us that the glory days are about to be history.

Let's briefly review some of these watershed events, and their significance to us as telecomm professionals.

A few months ago, Ameritech proposed a new regulatory model to the FCC (which has been making its own case to Congress for increased funding to bring it into the 20th century). The telco proposed opening up its franchise territory (Illinois, Indiana, Michigan, Ohio, and Wisconsin) to competition, unbundling its network to all sorts of service competitors.

However, Ameritech's quid pro quo in opening its local access doors is membership in the lucrative long distance market. Long distance is one of three areas (including equipment manufacturing and provision of information services) where RBOCs are banned by the 1982 divestiture decree.

Reading between the lines, we see a somewhat different scenario. Ameritech is simply trying to protect its base business (its monopoly), and is using its massive local exchange market as a bargaining chip. Ameritech has lost about one-third of its high capacity digital circuits to competitive access providers (CAPs) in major urban markets. In Chicago, losses have been closer to 40%.

Ameritech is not alone. Most of the RBOCs have suffered similar losses from aggressive CAPs whose local access terminals are conveniently installed in the most prestigious addresses in U.S. cities.

Congress is watching this development with anticipation. Despite his stated opposition to local exchange competition, Edward Markey (D-Mass.), chairman of the House Telecommunications Subcommittee, says he wants to see "genuine" local loop competition loop before opening up interexchange long distance service to RBOCs. Whatever he means by "genuine" remains to be seen.

Now how about the Justice Department? Concern is growing in Washington about Judge Harold Greene's allegedly poor health. Will he be able to maintain oversight authority on the RBOCs and their new boldness? If nothing else, Ameritech has brought the notion of full competition in the local loop out into the open (finally).

We could ask why it has taken so long, especially in light of the United Kingdom's March 1991 announcement in which local loop competition was formally granted. In two years since that landmark announcement, companies like British Telecom and Mercury Communications are surviving very well, despite the onslaught of alternate carriers, particularly cable TV companies, in the local loop

But Ameritech is not alone. A leading independent telephone group - Rochester Telephone - announced plans to break itself into two parts. The first is a wholesale business to sell network services to any company. The second is a retail company to market services. Ameritech's proposed changes were obviously devised to gain it access to a much bigger playing field. By contrast, Rochester Tel is responding to user requirements for a more diverse range of services, provided in a competitive environment.

The company determined that a "mini-duopoly" would provide the best way to leverage its network infrastructure and marketing expertise.

Pacific Telesis announced late in 1992 that it plans to divest itself of its wireless operations. That business will be turned into a new - and independent - company. The new company will be able to offer advanced products, such as personal communications services (PCS), at competitive prices based on its freedom from regulatory restrictions.

How about Southwestern Bell? The RBOC wants to buy two cable TV firms in the Washington, D.C. area. It's another sign of the times, and heralds yet another telecomm battleground for the 1990s. Even though the Cable Act of 1984 probably has its days numbered, the legislative process is so dreadfully slow that our grandchildren will be visiting us at the home when it is finally history.

Southwestern Bell wants to purchase a CATV company outside its franchise area so it can transport video across LATA boundaries. This has been traditionally prohibited by the divestiture, and ups the stakes in the IXC game.

Europe is significant in SWBT's recent actions. Southwestern Bell (and several other RBOCs, such as US West) are major CATV players there, particularly the U.K. SVMT's International Holdings unit is currently one of the U.K.'s largest CATV operators, with eight franchises. US West's Telewest subsidiary is rapidly establishing itself as another key CATV player in the U.K. SWBT recently agreed to permit Cox Cable Communications to acquire 25% of SWBT's U. K. operations. Both US West and Southwestern Bell have invested heavily in CATV in the U.K., because they see that when the Cable Act's restrictions are finally lifted, their overseas CATV expertise will be phenomenally valuable here in the states.
COPYRIGHT 1993 Nelson Publishing
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Communications Management
Author:Kirvan, Paul
Publication:Communications News
Article Type:Column
Date:Jun 1, 1993
Words:832
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