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Keep the Internet Open

by Dennis Cuddy

Congress is actually considering legislation that would effectively enable the Bells to exclude other telecom companies from using their lines to offer newer and cheaper telecom services.

I  love the Internet. I love it so much that I use the Internet to read about the Internet.

That's how I spend a big part of my down time. Surfing, searching and exploring the emerging technologies of the Internet.

And after a recent bout of cyber-indulgence on the net, I have become anything but bearish on the technology sector. If you look at what the Internet has in store for us—high speed broadband services which will put the world's shopping and entertainment centers at our fingertips and new protocols which will make out current internet experience look quaint—you can't help but to believe in the eventual revival of the technology sector.

But recently, I came across a very disturbing matter while surfing. Congress is actually considering repealing some of its most important work in opening up the Internet's superhighway. It is actually considering a law that would effectively enable the Bells to exclude other telecom companies from using their lines to offer newer and cheaper telecom services.

This bill is called the Breaux-Nickles legislation, named after two Southern senators who are pushing it. Anyone who cares about the Internet and its future should ask our Senators Mikulski and Sarbanes to fight it with all their legislative might.

The 1996 Telecommunications Act required that the Bell monopolies lease their telephone facilities to other telecom companies—those that wanted to provide telephone or Internet services, or both. The requirement was also put in place because, without it, there would be no competition in this industry. No would-be market entrant could reasonably be expected to duplicate the immense local telephone facility built over decades with ratepayer funds. It's what antitrust law is all about.

That competition law also recognized that the government basically gifted the local Bells these local monopolies after the 1984 break-up of AT&T. Congress also recognized that these monopoly facilities were built with our—the ratepayers'—funds at guaranteed rates of return. It was a pretty good deal for the Bells. They are able to charge telecom companies cost plus a reasonable profit for using these ratepayer-built facilities, and they are able to get access to the very profitable long distance telephone markets as a result of the law.

The Bells originally said they supported the new competition policy, but then, it seems, they privately declared war on it—so much so that the State and Federal governments fined them a whopping $2 billion for the anti-social conduct. Wow!

And speaking of antisocial, I read one story in where Verizon's sister Bell, SBC/PacBell, overcharged consumers by $350 million for telephone services and tens of millions for Internet services that customers never received. Consumer groups that watch out for us are now arguing that the Beaux-Nickles bill would not only end competition in the telecommunications sector, but prevent ("preempt" in legislative parlance) our state public services commission from catching them if they overcharge us for many of the telecom services.

The Bells have a pretty weak argument to justify their monopoly power-grab. They argue that they lose money when they have to lease their lines to competitors. When the U.S. Supreme Court looked at that issue, the nation's highest Court, in essence, laughed them out of court for making such a claim.

If the Bells lose any money from competition, it's the monopoly rent they cannot charge us because competition is in place. Maryland consumers will save over $80 million this year in local telecom charges alone as a result of the competition law.

The new, innovative telecom competitors that the Bell monopolies want to put out of business have invested $65 million for new networks, and much of our local Internet traffic traverses the networks they've installed. They offer us consumers as much as 50% off what the Bell monopolies charge us for telephone and internet services. When my basic phone service with a primary line and modem line costs more each month than my electric and gas bill, something’s not right.

Anyone who knows anything about the Internet understands that its success is built on its openness. It is that openness that Verizon is now asking Senator Mikulski and Senator Sarbanes to end.

Two years ago, citizens mobilized around the country to stop Congress from authorizing new taxes for Internet-based services. We should now similarly mobilize to stop Congress from bowing to the special-interest monopolies. For the best way for our Senators to ensure a technology revival is to encourage more, not fewer, participants in the telecom sector. And the best way to ensure that consumers want to stay on the information superhighway, is to make sure that we have competitors who can bring us better services and lower prices than the old stodgy Bell monopolies.

Dennis Cuddy is a resident of Baltimore.

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Republication or redistribution of Baltimore Chronicle and Sentinel content is expressly prohibited without their prior written consent.

This story was published on October 2, 2002.
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