Broadband Briefings

Published by NetAction Issue No. 24 May 24, 2002
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The Future of the Regional Bells

Two Takes on Bridging the Digital Divide

About Broadband Briefings

The Future of the Regional Bells

History seems to periodically repeat itself in the communications industry with cycles of mergers and divestments. The four Regional Bell telephone companies that currently dominate the local service market -- SBC, Verizon, BellSouth and Qwest -- emerged as an unintended consequence of The Telecommunications Act of 1996. Congress had passed the Act in hopes of increasing competition in local phone service and promoting the introduction of a wide range of new services.

Unfortunately for consumers and competitors alike, local phone competition has never emerged, monopoly abuses by the Bells have continued and few new services have made it to the marketplace. But the Internet may eventually bring sweeping changes to the telecommunications industry; changes that may well be the beginning of the end for the Bells.

The telecommunications network is just one part of the interconnected networks that together comprise the Internet. Cable, fiber optic, Ethernet, radio waves, wireless modems and satellites are all part of what some refer to as the "stupid" network that serves as a transport mechanism for a wide range of content. The tools used to communicate over the Internet -- email, Web browsing, instant messaging, streaming media, etc. -- were developed for use on this "stupid" network.

In contrast, the "intelligent" controls that optimize the telephone network for voice transmission are more often a hindrance than a help, since the tools used by an increasingly mobile population of Internet users are not always compatible with the voice network. Moreover, the tools of the Internet are cutting into the demand for voice lines and effecting the Bells' revenue. While the demand for connectivity to the Internet is increasing, demand for traditional phone service is declining.

In "The Future of the Regional Bells," NetAction Advisory Board member Judi Clark explains why the Internet represents the first really significant threat to the powerful Bell monopolies. The second in NetAction's "Networks for the Future" project, "The Future of the Regional Bells" is at:

Two Takes On Bridging the Digital Divide

Two bills that take dramatically different approaches to bridging the digital divide were introduced recently in the U.S. Senate. Both bills purport to promote the deployment of broadband Internet service in rural communities and poor urban neighborhoods. One might actually help expand Internet access to disadvantaged Americans; the other will simply preserve the Bell monopoly.

The Broadband Telecommunications Act of 2002, S. 2448 was introduced by Sen. Fritz Hollings, who chairs the Senate Commerce Committee. The Hollings bill would use existing telephone excise taxes to finance grants and low interest government loans for deployment of broadband networks in areas where high-speed Internet service is not already available.

The types of projects that would be funded include loans to upgrade existing facilities to provide broadband access, and grants for studying the feasibility of deploying broadband in specific communities, for stimulating demand for broadband service, for pilot programs to test wireless and satellite broadband systems, and for research in broadband technology.

Hollings is an outspoken opponent of H.R. 1542, the Tauzin-Dingell bill that passed the House of Representatives earlier this year. The other bill that was recently introduced in the Senate, S. 2430 by Sen. John Breaux and Sen. Don Nickles, is indistinguishable from the Tauzin-Dingell bill. (See: for details on the Tauzin-Dingell bill.)

Like H.R. 1542, the Breaux-Nickles bill would eliminate the provision of the Telecommunications Act of 1996 that requires the Bell monopolies to give their competitors access to their facilities at reasonable prices. Without that access, many competitive Internet service providers would be unable to offer broadband access. This would reduce or eliminate competition, ensuring the extension of the Bell phone monopoly into broadband Internet access.

Moreover, the Breaux-Nickles bill would prevent states from regulating broadband services, facilities, and equipment. This would effectively prevent states from enforcing consumer safeguards designed to ensure fair rates, services, and billing practices.

The complete text of both bills is available on the Web at:

About Broadband Briefings

Broadband Briefings is a free electronic newsletter, published by NetAction to promote policies that encourage rapid and widespread deployment of high-speed Internet access. NetAction is a California-based non-profit organization dedicated to promoting use of the Internet for grassroots citizen action, and to educating the public, policycmakers, and the media about technology policy issues.

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