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NATA President Challenges Judge Greene and FCC to Make Telecommunications Truly Competitive.

The President of the United States has great fun reciting the words of Franklin Roosevelt, whether to twit Democrats or stir the conscience of the American people, I suppose only he can tell. But there's no reason to verge fromt he course if the path is true.

In 1940, before the University of Virginia, Roosevelt had occasion to note that "Every generation . . . has questions to ask of the world. Most of the time," Roosevelt said, "they are simple, but nevertheless difficult, questions--questions of work to do, opportunities to find, ambitions to satisfy. But every now and again in the history of the republic a different kind of question presents itself--questions that ask not about the future of an individual or even of a generation, but about the future of the country, the future of the American people. There is such a time again today."

We today are asking these questions: those about "work to do, opportunities to find, ambitions to satisfy," and those about the future of the country and of the American people.

These questions engage our lives in many ways: war and peace, budget and fiscal policy, international trade, business and employment opportunity, income and inflation, recession and stagnation. They also engage us in the industry and commerce we call telecommunications. They engage us because we conducted a revolution out of our need for work to do, opportunity to find, ambitions to satisfy. They engage us again because the fruits of that revolution, and the victory we won, are again being challenged.

I recall in the winter of 1968 walking to my job at the FCC. The streets were laden with tear gas. There was rioting in Washington, DC, and President-elect Nixon was convinced of imminent revolution threatening the violent overthrow of the government. When finally I reached work, a little the worse for wear, sitting on my desk was AT&T's "foreign attachment" or connecting arrangement tariff, and while I knew the government was in no real danger, I also knew the rioting was not just about Viet Nam, but reflected a deeper dissatisfaction with practically everything in the institutional fabric of American society. Everything was up for grabs, and this industry, as then structured, was about to pass through the fire. That tariff was the germinal seed out of which new work, opportunities and ambitions would grow. While the revolution would be quieter than President Nixon suspected, it would be no less real or durable.

Everyone knows that history. We were all actors in the trenches and at the barricades. We took the territory. We survived. And we won.

What we started in 1968 laid the foundations for deregulation and divestiture in 1984, and in 1984, the world of telecommunications changed with devastating consequence.

We did our work at this association, maintaining traditional legal and legislative services while initiating new isntitutional arrangements; building brdiges to the carrier industry in hope of reconciling differences that should no longer divide us. We retained centralized operation group (COG) services to expedite the delivery of local-exchange facilities to the public and established an interexchange carrier-services committee to resolve problems of equal access and to reduce delaysin the installation of interexchange facilities. We put up a Human Resources Council to promote and assist public-sector education in telecommunications, to publish industry compensation and personnel surveys and to initiate a new industrial-relations activity tailored to the needs of this industry. Everything that answered the questions of work to do, opportunities to find, ambitions to satisfy, we endeavored to do. Forum for Diverse Interests

We became a forum for the meeting of diverse interests: the public and the industry; the regulated carriers and independent manufacturers and distributions. Talks with U S West and Interline deepened understanding within the industry, led to the clarification of issues, and opened broad new prospects for independent-contractor sales in the new competitive product market now emerging.

But where the carrot would not avail, we used the stick of legal action. Legal and legislative recourse retained COG operations, and imposed separate subsidiaries over the Bell operating companies; fought for the retention of separation requirements for AT&T; sought for the maintenance of access charges over Centrex services; south through state action to stem Centrex rate reductions. contract premiums, and access-charge offsets; and sought clarification of old termination liability problems that impair the capacity of consumers to make new product choices.

But all of those efforts--and even the successes--do not hide dark clouds just over the horizon. Judge Greene and FCC commissioners are now running on parallel courses. They loudly extol the benefits of competition as they make policies that effectively limit to a few those who can play the competitive game.

So, today, we entreat Judge Greene and the FCC to take note that the competitive policies underlying their decisions do not tolerate the biased implementation they now proclaim, that competitive enterprise is for all, and not for those few who can survive only because their economic well-being is protected by regulation that assures that survival. We here remind Judge Greene to stop disregarding the existence of small business distributing, and to shed his view that competition is only meaningful when it involves the countervailing economic power of a richly endowed few. His job, lest he forgets, is to rule for equality before the law, not to excuse discrimination in the name of equality at the foot of the law.

FCC commissioners have been quick to take this lead for preferences. They apparently love the bandwagon. They did say the Bell operating companies would be required to have separate subsidiaries for their competitive businesses, and we were pleased for that. But the separation rules were more like swiss cheese than cheddar. They granted exceptions for dial tone referral, for the integrated marketing of product and exchange services, for joint installation and maintenance, common billing, finance, legal, and administrative services. Waivers and exceptions flying from the court and the FCC served up competition as a feast of minced meat. Praise for the competitive venture was only acclaim hiding behind hypocrisy. Stemming the Growth of Markets

Not surprisingly, the Bell operating companies and the states were quick to seize the advantage, using Centrex and the central office not only to stem the growth of communications product markets, but to serve as a substitute for those products. While the FCC said access charges would apply to each line of Centrex, it sowed the seeds of cross-subsidy and competitive destruction by authorizing the states to offset the charges . . . and they did. They allowed the detariffing of Centrex, permitted rate reductions and contract discounts, and fixed Centrex access charges in ratio to PBX trunk equivalency--all to assure the substitutability of Centrex for PBX and key-system products.

And it worked. In 1983 and 1984, 520,000 new lines of Centrex were added, and another 280,000 lines are expected to be added in 1985. The expected five year growth for PBX sales will be cut in half, shipments by PBX manufacturers will be down by one-third, key-system sales will fall 15 percent, and key-system shipments by manufacturers will be off about ten percent. Total key and PBX sales by the interconnect industry are expected to remain flat through 1988, and may drop in 1985 by $340 million.

These statistics foretell an ominous future for the people who built this industry, unless we change the circumstances that burden that future . . . and we will. The abuse of communications product markets by Centrex--by runnign stored-program control and interactive computer services through the telephone company central office--must be stopped. We have actions pending to stop the feature enhancements of Centrex, and we will commence action to seek federal preemtion of Centrex, including federal tariffing, federal regulation, and federal control. By this time we would expect those who possess monopoly power to exercise restraint in its use. Where they cannot, we will assist them.

Once again, we are reminded that our mission is the pursuit of liberty, that we are forever obliged to fight for it against those in and out of government who would deny to us the work we do, and the opportunities we find.

The world of telecommunications changed in 1984. But for us it had a certain sameness, still the struglle for equality before the law. Still the job of working as the conscience of the government, reminding those in positions of power that federal authority is not to be used to protect the privileges of the few, but to preserve the rights of all.

This industry and the American people were promised many things in the new world of deregulation and divestiture. But the promises many things in the new world of deregulation and divestiture. But the promises were as straws in the wind at the hands of Judge Greene and the FCC's commissioners.

So we have come to live in a world where the integration of regulated and unregulated services has been revived; where competitive and unregulated marketing operations of regulated entities are capitalized with resources drained from regulated, but monopolized, services; where services that remain under regulation, such as Centrex, are used to capture and weaken the present and future viability of competitive product markets; where separation rules, under a system of exceptions and waivers, are practiced more in the breach than the observance; and where federal authority is used to rekindle all the old and long-held state antagonisms against private initiative and private enterprise. Sense of Independence

I think these public officials forget from whence we hail. From Texas, Kansas, New York, Colorado, California, from all the places east, west, north and south, where the sense of independence and individual initiative is strong.

I think they forget who we are, the people who advanced the progress of useful arts and sciences, who found communications technology languishing, turned it in five years, and revolutionized it in only one decade.

We do not seek privileges for ourselves. We entreat only for recognition of the principle that those who possess monopoly power will not be enfranchised to use the resources of that power against those who are not so endowed. We believe there is room in the market for all. But we are equally strong in our view that there is no room for those who think their economic power confers the right to take it all. We will not have that entreaty disregarded because current federal officials are biased toward protecting the wealth of a few major corporations.

In every cycle of history there are hopes and fears, perhaps, agendas that start or end with something we call values. But I am persuaded that whatever the period in which we live, we are reduced to the practical and tangible dimensions of economics. We are today, as in the days past and the days ahead, subject to the vicissitudes of the marketplace. Prophets may have the enjoyment of spinning prohecy, historians the impugnity of chronicling what happened. But ordinary men and women of enterprise must live it, prosper by it, merely survive it, or surrender to it.

We in this industry are in many ways ordinary people. But we have elected to do extraordinary things, and the record says we have done so.
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Author:Spievack, E.
Publication:Communications News
Date:Nov 1, 1984
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