Telecoms to Lawmakers: Hands Off New Net-Based Services

As Congress continues work on a potential overhaul of the 1996 Telecommunications Act, several of the nation’s top telecommunications companies sent one message to Capitol Hill: Keep your hands off new Internet-based services so real competition and innovation can flourish.

Lucent Technologies chief executive Patricia Russo told the House Energy and Commerce Subcommittee on Telecommunications and the Internet that real deregulation was needed so telecom equipment suppliers could compete properly. “We need to minimize and, in some cases perhaps eliminate, economic and other regulations in the communications marketplace," Russo told the subcommittee.

Motorola chief executive Edward Zander, whose company is the number-two cell phone maker in the U.S., called on the subcommittee and the full Congress to set up unified, rationalized laws for Internet telephony services.

Committee Republican leaders have said they want to get new legislation aimed at deregulating Internet-based services including Internet telephony by August of this year. “Congress needs to…ensure that all companies have the right incentives to invest and innovate,” said full Energy and Commerce Committee chairman Joseph Barton (R-Texas) at the subcommittee session.

And it doesn’t matter, so far as Alcatel North America is concerned, whether it’s a tweak or a full overhaul, just as long as it gets done swiftly enough, “so that we get the certainty we need in this domain,” as Alcatel chief executive Michael Quigley told the subcommittee.

The Cato Institute, a libertarian think tank which has long pushed for telecommunications and other deregulation, advanced the subcommittee hearing with a policy analysis saying that the original mid-1990s deregulatory climate that resulted in the Telecommunications Act missed one significant point.

“It would have been far better if deregulation had simply let market forces do their work without scoring success primarily on the number of competitors,” wrote the paper’s author, Lawrence Gasman. “If there was worry that the incumbent carriers were so powerful that no meaningful competition could emerge, policymakers should have taken a look at newer technologies such as wireless and voice-over-IP, which are potentially highly disruptive of the incumbent players’ position.

“The good news is that the kind of regulatory measures that brought about the telecom bust now look like they are failing legal challenges,” Gasman continued. “But what happened to telecom in the late 1990s remains a cautionary tale of how reforming regulation rather than truly deregulating can lead to disaster. With Congress potentially poised to re-open and revise the Telecom Act, lawmakers must learn from the mistakes of the past and ensure they do not repeat them.”