Bills, Bells, and Tauzin-Dingell

Forget incumbency, regulators need to worry about technology

Manjari Raman

Manjari Raman

Despite its short life, the Convergence Era has conclusively proved how disastrous it is when regulation fails to stay in step with technology. While government decision-making structures are designed to take time, the present pace of technological innovation allows no such luxury: by the time the regulators have read the manuals, understood the acronyms, and begun to see light at the end of the fibre-optic cable, its too late. There are new manuals and acronyms waiting to be mastered. Redrawing the regulation time curve to match the technology horizon is now going to be the challenge before every rational government that wants its citizens to enjoy the cutting edge of innovation.

Nowhere is the churn of a fast-changing technology more visible than in telecom. India’s telecom regulatory circus notwithstanding, an equally ludicrous pantomime is now being played out in Washington over the controversial Internet Freedom and Broadband Deployment Act of 2001, authored by Congressmen Billy Tauzin and John Dingell. Currently, the Bill is undergoing a tortuous process of debate but, more interestingly, in parallel to what has often been seen in India, the debate is not confined to sanitised offices of the regulatory authority. The big issue at the centre of what is being dubbed as the battle between the rich and the wealthy: broadband.

Quite simply, the Bill seeks to ease the rules to allow the Baby Bells SBC, Verizon, Qwest, and Bell South the right to sell high-speed internet access using Digital Subscriber Lines (DSL), a technology that works over telephone lines. That should give you an idea of who is leading the opposing charge: the cable czars, dominated by AT&T Broadband. Currently, it is cable which controls 70 per cent of the broadband market in the US and is currently valued at $30 million.
Bear in mind though, what both sides are greedily eyeing is the future: at last count, only 7 to 8 per cent of America had broadband, and there are vast empty spaces still to be won.

If the stakes in this new wild west are astronomically high, the arguments are equally grandiose. Those in favour of the Bill believe it will nurture competition, and allow the Incumbent Local Exchange Carrier (ILEC) (aka the Baby Bells) to offer broadband in competition to the local cable guy. Those against the Bill, surprisingly enough, decry it for its anti-competition impact. That is because, under current US laws, essentially the Telecommunications Act of 1996, the Baby Bells are explicitly prohibited from offering long-distance data and voice services within their regions until they can meet the market-opening conditions that were set for them. In other words, claim the detractors, the Tauzin-Dingell Bill virtually hands over long-distance services free to the Baby Bells, without obliging them to provide access to their pipes to the competition.

The issue from an Indian perspective is not who is right or wrong. The issue is what is going wrong at the centre of the debate. For one, technology is running rings around the regulators as usual. Instead of accepting the ground realities and, indeed, even acknowledging the topography of the future Americas, regulators are caught more in trying to create a level playing field between incumbents and new players. Here is the inherent conflict: in telecom, the game is often not of level playing fields, but of recognising that the playing fields are different yet converging. Sure its complicated, but, as a consumer, wouldn’t you honestly say that you want both cable and DSL as long as both compete to offer you good service at a low price?

Ironically, in all the talk of territory, no one is really bothered about the worst consumer — the remote, low-margin user in some rural areas of the US. Billy Tauzin, who as the chairman of the US Congress Energy and Commerce Committee, is virtually pushing and shoving the Bill forward represents rural Louisiana. Much of his righteousness comes from the belief that cable companies are not interested in laying fibre for long distances to service the few customers at the end of the fibre in rural areas. Down the road from where Tauzin lives, though, in the small community of Spanish Fort, it is neither the cable company nor the phone company, but a small utility company that is wiring up the local population. In other words, the sooner regulators realise the real power behind the convergence of communications technology, the sooner they will have a more coherent fix on how to approach policy making.

Finally, will someone, somewhere, show the guts to stand up and say that distance doesn’t matter? While more than $2 million had been spent by June, 2001, to stop the Baby Bells from getting into long-distance services through the back-door, regulators across the globe have to realise that in the networked world, distance is no longer a metric. Like it or not, we are moving breakneck towards the dissemination of voice and video over the internet. Regulators of the world, get off the information highway if you cannot handle the speed of change.