How The Bells Stole America's Digital Future

Conclusion and Recommendations

The digital divide exists today in part because the Bells broke their promises. The Bells are among the nation's most profitable companies today because they convinced regulators in many states to adopt alternate regulation plans in exchange for those promises. We can't change the past, but we can learn from it. And the most important lesson regulators can learn is not to believe the Bells' promises.

Today, the Bells are asking Congress to lift the restrictions on their entry into the long distance data services market, before the local phone service market is fully competitive.[71] Given their history, this would be a mistake. It would eliminate the last remaining incentive for local competition, enabling the Bells and GTE to retain their monopoly grip on consumers, and further widening the digital divide. The Bells' claim that they are seeking regulatory relief to fix the digital divide by providing only digital services across LATA boundaries is spurious and an attempt to get the long-distance Trojan Horse inside the regulators' gates.

In many respects, the Bells represent the absolute worst aspects of traditional monopolies. They are slow, weighed down with bureaucracy and more interested in defending their market share than in providing innovative new technologies and services to their customers. They have an abysmal record of keeping their promises. Based on this record, we offer the following recommendations to policy makers:

  1. Congress should hold hearings to look into how much money the Bells collected as a result of promises they subsequently broke.

  2. Excess profits that are identified as a result of those hearings should be refunded to ratepayers or deposited into a fund to create and support expanded access to information technology in libraries, schools, and community technology centers.

  3. Until robust competition has emerged in telecommunications and information technology services, Congress should resist RBOC pressure to modify the Telecommunications Act of 1996. In addition, the FCC should refrain from approving any more RBOC applications for entry into long distance markets until there is much stronger evidence of compliance with the Act's 14-point competitive checklist.

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