State of the Telecom Industry

The state of the telecom industry is strong.  The economic explosion that was unleashed by the breakup of AT&T and the passage of the Telecommunications Act of 1996 is continuing to have positive effects on American competitiveness and growth.  Gone are the days where innovation proceeded at a snail’s pace, replaced today with new products and services that come to market at breakneck speed.  Just last year members of the Broadband Coalition took award-winning and market-leading positions in the industry.  Innovations like burstable bandwidth (Dynamic Capacity), 100G network speeds coast to coast, and the launch of broadband over copper at 100 Mbps are the most recent examples, and all are evidence that to become relevant – or just maintain viability – you must innovate.

It’s not just the products themselves that are innovative, but it’s how they’re delivered and packaged as well.  Back before AT&T was broken up, consumers had difficulty attaching a device of their choice to the network; there was no incentive for efficiency or price competition because AT&T owned all the customers; and long distance calling was so expensive, people would start timers to not exceed their budget.  Now, thanks to competitive entry after the breakup and the ’96 Act, long distance charges are an afterthought, people and businesses buy their services in bundles, and users churn through telecom devices at a pace that outstrips seasonal fashion turnover.  And what we consume over broadband and the business we conduct is beyond the imagination of anyone that tried to predict what the 21st Century would look like from their insular monopoly surroundings of the early 1990’s. 

Thankfully, times do change and hopefully we’ve left those monopoly days in the past.  What doesn’t change is the reality that competition produces innovation – regardless of industry.  In fact, comparing the last 17 years of unprecedented telecom innovations and number of new companies to the staid century that preceded it is evidence of this innovation and the benefits that flow from it.  It’s also evidence that the pro-competitive framework that was established in 1996 is worth preserving.  It seems obvious, but as we celebrate the Act’s 17th anniversary, and take a measure of the state of the union of these United States, we must be watchful of the threats over the horizon by big telecom; one that is desirous of reassembling the monopoly it felt was wrongly ripped away.  Only now instead of a chokehold on telephone calls and long distance, it will now control broadband, video and wireless services.  In short, it would be a telecom juggernaut so massive as to dwarf the monopoly that was broken up nearly three decades ago, bringing back the bad old days of stranded innovation and lack of choice.

Ronald Reagan famously said that “Freedom is never more than one generation away from extinction,” and that “It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free.”  Truer words could not be spoken, and frankly they also apply to today’s state of the telecom industry.  We must preserve the very competition the spurs innovation today, or we may one day describe to our children an industry that once flourished and produced fruit for millions of Americans, but has fallen into stasis because the important competitive framework that led to those amazing, innovative achievements was dismantled.

-TBC Editor


The Broadband Coalition Commemorates The Anniversary of the Signing of the Telecom Act

On February 8, 1996, President Bill Clinton signed the bipartisan Telecommunications Act of 1996 into law.  It sought to eliminate the last vestiges of monopoly and inject competition into the telecommunications market, resulting in tremendous economic growth and innovation for America.

Unfortunately AT&T is now trying to roll back the very policies that led to competition.  As we look to the future, while being mindful of the past, we think a few key facts about AT&T’s latest attempt to eliminate competition are in order. 

  • The IP evolution has been occurring for many years – and it’s driven by competition

            The evolution of the circuit-switched public switched telephone network (“PSTN”) toward a packet-switched, Internet protocol-based network is already underway – thanks in large part to competitive innovators.  AT&T is late to the IP world, and now wants to remake the rules in its favor.

  • The FCC should focus on competition rules rather than returning to monopoly policies

Since competition is driving the IP evolution, it’s clear that in order to accelerate IP adoption the Commission should focus on protecting and updating its pro-competition policies where necessary.  Protection of consumers, emergency communications, network architecture and access are matters already before the FCC in pending proceedings.  New proceedings are unnecessary  —AT&T’s proposed return to monopoly is a redundant, harmful distraction.

  • The Telecommunications Act of 1996 is technology neutral

The Commission can and should address the IP evolution using the technology neutral framework established by Congress in the ’96 Act to promote continued competition through reasonable access to last mile facilities and interconnection.

  • Managed IP voice interconnection is separate from the Internet

Adoption of all-IP networks does not mean a convergence where all communications traverse the public Internet.  The public Internet and managed IP communications will remain distinct for the indefinite future, primarily because of the need to ensure high quality of service for communications when the “best efforts” nature of the Internet will not do.

  • Changes in technology do not alter the need for network access rules

The FCC and DOJ have recognized for decades that ensuring access to last-mile connections to businesses is necessary because most business locations are served by only one wire.  This will not change in an all IP world – only the electronics attached to the wires will change.  The FCC must therefore update its policies where necessary to ensure reasonable access to last mile business connections in an IP environment.

 -TBC Editor




Broadband Coalition Statement on Senate Reconfirmation of FCC Commissioner Mignon Clyburn

The Broadband Coalition congratulates Commissioner Mignon Clyburn on her reconfirmation by the U.S. Senate. Commissioner Clyburn has shown tremendous leadership in supporting competition in the broadband marketplace.  Competitive markets lead to innovation, and those innovations benefit all Americans.  We look forward to working with the Commissioner as the FCC addresses some of the most pivotal new issues facing the technology sector today.  Her expertise will be vitally important in these debates. 

- TBC Editor


AT&T’s Shakedown Shuffle: The Facts Behind the Fairy Tale

AT&T’s latest ploy to get rid of important market-opening rules and consumer protections is the same swindle they tried to sell in last year’s failed mega-merger:  “we will only invest in our network if we can get a sweetheart deal from regulators and gobble up our competition.”  Fortunately, the Department of Justice and the FCC didn’t buy it and blocked their illegal merger in a highly concentrated market. 

This month’s fairy tale is, “we will only invest in our network if the FCC eliminates the pro-competition and consumer protection rules in the communications marketplace.” 

Of course the truth is that AT&T will continue to invest in their network, because any company that wishes to remain in business must do so.  Companies are forced to innovate and invest in their networks because of competition, not in spite of it. 

Lately, AT&T and its legion of honk-for-hire policy shills have been publishing blatant misrepresentations of both our business models and our legal filings. 

Unburdened by the need to rely on facts, a recent “Communications Liberty and and Innovation Project” creative writing exercise asserts that competitive carriers oppose the transition to IP networks because they want to continue to exploit purportedly ill-conceived government regulation.  That’s false:  we all support AT&T's belated decision to join  the all-IP world—we just don’t think that this important transition should be exploited as a means of eliminating competition and consumer protections.    

The facts are important here.  Here are some for AT&T’s consideration.  Competitive carriers have invested billions of dollars in state-of-the-art, next generation IP networks for decades, pushing the envelope on product and service delivery to the business market.  Competitors have been innovation leaders – recently adding another to their list of “firsts” by deploying the first coast-to-coast 100 Gigabit network in America and aggressively pushing the deployment of Ethernet to businesses throughout the country. AT&T is now jumping on the IP bandwagon and making much-needed investments in their wireline business because it must respond to its competitors’ innovative offerings. 

History is also important.  AT&T has a long and well-documented track record of blocking competition and engaging in unfair marketplace tactics; that’s the reason the Reagan Justice Department broke AT&T up, opening a floodgate of competition which led to innovation, lower prices, and eventually to the creation of the Internet backbone.  Absent this competition, AT&T would have delayed (likely for many years) the deployment of technologies such as Ethernet, a technology with such obvious potential to cannibalize AT&T’s existing revenues.   

Tim Wu (in his book “The Master Switch”) describes an AT&T campaign to protect its monopoly last century: “AT&T as a matter of course refused to make connections between the Bell system and the Independents, but it would go much further to protect its monopoly.  Relying on its profits in stronger markets, Bell would dramatically undercut the rates of local independent telephone companies in any contested area, a tactic known as predatory pricing. . . According to one account, Bell would rip out wires and phones, and ‘in truly medieval fashion, pile the instruments in the street and burn them, as a horrible example for the future.’” (Wu, p. 49).

AT&T must respond to the innovation competitive carriers bring to the marketplace.  It is doing so by investing in its network, but it also claims that its (rather exaggerated) investment somehow justifies eliminating rules that protect against anti-competitive and anti-consumer conduct.  We have no quibble with AT&T’s investments or its transition to IP; we are ready to compete with investments of our own.  But there is simply no basis for using AT&T’s business plan as the pretext for eliminating the rules that make competition possible and that safeguard consumers. 

We all agree that changes are necessary to get to an all-IP world—we just disagree on the role competition plays in getting us there.  AT&T would like to eliminate competition; competitive carriers would like to expand it and we believe that Members of Congress, the FCC and the Administration will rely on facts, and not the hollow protestations of AT&T's policy shills.

- TBC Editor


Who's Afraid of a Little Competition? 

“AT&T says they want 21st Century regulations for 21st Century technology.  It sounds good; but, here is the problem.  They cannot get to the 21st century by returning to the policies of 1934.  In short, they propose that the federal government protect them from competition, end interconnection, end wholesale access to bottleneck last mile facilities  use taxpayer funds to  subsidize them and, if that is not enough, they ask the government to forcibly return to AT&T those who chose a competitor.

It is an unbelievable proposal. They are asking the FCC to end the most successful economic policy of the last thirty years — created and sustained with a rare bipartisan consensus that rejected monopolies and duopolies of the past and instead promoted competition and functioning free markets.  It is this competitive policy  that brought us the information age, the telecom revolution, the internet backbones and the digital world of today.   

Whereas, we welcome AT&T leaving their old technologies and joining the competitive broadband industry in an IP world,  we do have a problem with their asking for a return to the last century's policies promoting monopolies and duopolies.”  

- Former U.S. Congressman Chip Pickering