Opening the last mile: Still waiting. (Webcasting Magazine).

It has been nearly six years since the U.S. Congress passed the Telecommunications Act, promising that it would lead to greater competition, especially in the local phone market known as the "last mile." What the past years have delivered, however, fills far short of this goal, in large part because the (local), Bell phone companies, which still control 96 percent of the local residential market, have been highly effective at preventing competition. Through an aggressive, state-by state approach, the Bell Companies have refused to voluntarily adhere to any of the competition-opening requirements that the 1996 Act imposed upon them.

To the TV industry, the "last mile" means another form of transport or delivery directly to homes via broadband phone lines (DSL).

This resistance to competition is facilitated by the lack of a central U.S. regulating authority to monitor compliance by the Bell Companies with the requirements established by the Act. These monopolists litigate and re-litigate the same issues before the Federal Communications Commission (FCC) and each state regulatory authority. The burden is on the would-be competitor to be informed about every prior relevant competitive issue in order to stand a chance at prevailing in the market it seeks to enter. Overwhelming financial commitments are demanded from a potential competitor simply to secure from a Bell Company that which the company is required to provide by law. This tedious, state-by-state exercise substantially delays the rollout of competitive telecommunications products.

Last mile competition for residential customers appears to be losing potential viable competitive providers daily. One potential avenue of competition comes from those who seek to provide services on a resale basis.

Although the Act requires the Bells to allow potential resellers to purchase traditional voice services or digital subscriber line (DSL) services for the provision of data services and Internet access, few competitors have managed to design a successful business model to sustain competition utilizing the Bells' facilities or services. Those competitors that do rely on resale as a business model have found their business plans further compromised by several ongoing proceedings initiated by the Bells to relieve themselves of the obligation to continue to offer such facilities or services on a wholesale basis.

In the present environment, competitors that can deliver voice, data and video over their own network facilities appear to provide the only viable solution to ensuring true innovative service offerings and creative pricing alternatives to the products currently provided by the Bells. The challenge for these competitors is whether the necessary regulatory certainty can be established and market opportunities identified sufficient to justify the substantially greater cost to wire individual homes as opposed to tightly-clustered office buildings.

Those best positioned to distribute competitive phone services to the largest number of residential customers are the cable companies. While these companies' business plans vary, they have all demonstrated an interest in and ability to provide voice and data in addition to video [i.e. whether their business plans are driven by digital technology and the use of Internet protocol (IP), or by a combination of telephone technology and cable technology].

The secret to success for these cable companies will be their ability to roll out new products -- such as digital set-top boxes that permit video-on-demand, voiceover IP, Internet access service -- without needless regulatory intervention. New innovative product offerings must be allowed to be market tested; therefore regulators must refrain from shoehorning new products into legacy definitions that simply do not fit, resulting in needless regulation. Finally, regulators must ensure that competitors do not continue to be whipsawed on every important local competition issue previously negotiated or arbitrated. A good starting point would be for regulators to demand that the Bells submit the results of all other instances in which similar issues have been litigated, arbitrated or otherwise addressed by other regulators. Such a requirement may impose some self-discipline on the Bells and avoid needless delay and regulatory intervention.

The 1996 Act gave the FCC and state regulators the power to ensure that local markets are opened to competition. The FCC and state regulators must step up enforcement of the Bells' obligations to eliminate the regulatory uncertainty and delay in today's local marketplace. Only through such vigilant stewardship of this emerging competitive marketplace will the ideals that motivated the 1996 Act someday be realized.

Cherie Kiser is a partner in the Washington, D.C. office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo and Chair of the firm's Communications Practice Section.