The FCC Takes A Positive Step for Consumers

On August 31, the FCC announced it was replacing what it termed “outmoded” rules governing the provision of long distance services with a new regime that allows AT&T and Verizon to more efficiently integrate their service offerings. As the Commission put it: “The old framework included requirements that the BOCs separate their local telephone and long distance operations, which is at odds with a market environment where local and long distance services increasingly are marketed and provided on a bundled basis.” No kidding.

While a long time in coming, the FCC deserves credit for its deregulatory action. Most of the rules requiring separate local and long distance operations were put in place immediately after the AT&T divestiture in 1984, and have remained in effect since. This despite the fact that the distinction between “long distance” and “local” calls has largely eroded as consumers choose any distance, anytime buckets of minutes.

In partially dissenting, Commissioners Copps and Adelstein strike an odd note. They worry that what they claim as “the significant consolidation” that has taken place in the marketplace will leave consumers with “a choice between two providers—a cable and a telephone company.” It is worth noting the vicious competition between the telcos and cable companies in areas where they are now battling head-to-head for customers. (I just wish I had the amount of money they spend each week mail promotional print materials on my block!)

But, more fundamentally, nowhere in their statement do Commissioners Copps and Adelstein account for the wireless providers and the gazillion “all distance” minutes they sell each week. No do they account for the independent VoIP providers, such as Skpe or Vonage, and their offerings of bundles of “all distance” minutes. This omission is curious, and significant, amidst all the talk of “duopoly.”

In any event, Chairman Martin and his colleagues deserve credit for getting rid of "separation" rules that only added to the costs and inefficiency of providing services that consumers increasing prefer to take on a bundled basis.