ARLINGTON, VA. -- Bell Atlantic Vice President and Associate General Counsel Edward D. Young, III today challenged newly-elected state legislators to forego Federal Communication Commission (FCC) interconnection guidelines, and to get back on track with the intent of the Telecommunications Act of 1996.
Speaking at an American Legislative Exchange Council conference this afternoon in Washington, D.C., Young said, "Congress gave the FCC authority to develop certain standards and guidelines applicable to all networks, and the states were entrusted with overseeing prices and ensuring potential competitors acted in good faith. At this point...it is fair to say that things have not gone as Congress intended. Instead of reducing regulation on telecommunications companies...the FCC issued a 700 page order that inserted itself into the state's price-setting process."
Young said the FCC prescribed a formula for states to use that ignores actual costs and investment strategies that local companies and state commissions jointly developed over the past 60 years. "The FCC imposed a one-size-fits-all solution in an effort to artificially jump start competition, instead of allowing the state commissions to work with companies to develop solutions that met the specific needs of citizens."
The solution, Young said, is for state regulators to "exercise their authority, empowerment and legal responsibility to ensure that the intent of Congress is carried out." This will promote a "flurry of competitive action up front, and ongoing competition among healthy industry players."
Young said large, profitable companies, such as AT&T, MCI and Sprint, benefit the most from the FCC's methodology and philosophy, at the same time these companies are raising rates while paying lower access fees.
"Under the FCC formula, no competitor in his or her right mind would ever construct their own network," Young said. "It's like requiring McDonald's to make space available in its store to Wendy's at prices so low that Wendy's would never build its own store."
"The regional Bell companies have cut access charges for long distance companies by 73 percent since 1985, and since 1994, AT&T, MCI and Sprint have all raised their basic rates--by as much as 20 percent according to some studies."
In closing, Young said that state commissions must ensure that policies that promote infrastructure construction and economic development continue. He added, commissions must also take steps to allow local companies to offer long-distance service quickly--to bring real competition to the market--and must adopt rules that do not give competitors a free ride at the expense of their constituents.
"Taking this long-range view is the only way to ensure that the consumers you represent--not the long-distance companies--will be the ultimate beneficiaries of the Telecommunications Act of 1996," Young said.
Bell Atlantic Corporation (NYSE: BEL) is at the forefront of the new communications, entertainment and information industry. In the mid-Atlantic region, the company is the premier provider of local telecommunications and advanced services. Globally, it is one of the largest investors in the high-growth wireless communication marketplace. Bell Atlantic also owns a substantial interest in Telecom Corporation of New Zealand and is actively developing high-growth national and international business opportunities in all phases of the industry.