FCC ruling on renting won't cause big changes

FCC ruling on renting won't cause big changes
The Federal Communications Commission is preparing to deliver a decisive blow to the Telecommunications Act of 1996. The Wall Street Journal reported last week, that the US regulatory giant plans to stop letting the Baby Bells rent their networks at cheap rates to competitive local exchange carriers (CLECs), giving the Baby Bells once again full charge of the local exchange.

After hearing initial reports, the FCC once again became the talk of the government and the US telecommunications sector. One day after the Wall Street Journal reported on the FCC potential new rules, the US Senate Commerce Committee asked for a hearing with the FCC. And now this week, the Consumer Federation of America is claiming that the FCC proposal would "short-circuit" local competition.

Short-circuit what competition? On the surface, it's easy to agree with the consumer activists groups that the ideal win for consumers would be to have multiple carriers competing for the same business. Look at what it's done for long distance service. I use my long distance service a heck of a lot more than my local service and my local bills are often more expensive. With 5 cents night and weeks, I can count on a phone bill to be in the mid $20 range while my local bill is consistently set at $33 (which is half of what it used to be before I bought an 802.11b router to share my broadband connection around the home).

But, we've had the Telecommunications Act in place since 1996 and have we seen a stark change in our local services. Not from my standpoint. While long distance phone companies struggle, Verizon, Bell South, and the other RBOCs have remained in the driver seat over the last seven years, pushing the telecommunication sector forward at their pace and using their rules. So while the Telecommunication Act promised competition, it never really panned out any way.

That's not to say that companies didn't try. The competitive LECs (CLECs) certainly based their existence on the regulation provided under the telecom act. In an ideal world, the incumbent LECs (ILECs) would have rented their space cheap and competition would reign. But, the ILECs found ways to keep the CLECs from surviving. For example, it was well known that the ILECs would give access to a CO and then force a CLEC to obtain the necessary liens for delivering services to end users. So you have to ask, did the Baby Bells ever stop controlling the local markets?

In the end, the Telecommunication Act of 1996 did little to change the face of the local market. So removing the renting part to the act won't make much difference to the telecom sector.