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Copyright 2000 Federal News Service, Inc.  
Federal News Service

July 18, 2000, Tuesday


LENGTH: 955 words


 Thank you for inviting me to testify before the Committee today. My name is Glenn Ivey. I am Chairman of the Maryland Public Service Commission and President of the Mid-Atlantic Conference of Regulatory Utility Commissioners. I offer my testimony this morning on behalf of the National Association of Regulatory Utility Commissioners ("NARUC"), which strongly opposes H.R. 1686 and H.R. 2420.

Congress crafted the Telecommunications Act of 1996 ("the Act") to promote competition, and thereby to secure lower prices and the ubiquitous deployment of advanced technologies. This was to be achieved by balancing the rights and responsibilities of ILECs and CLECs considering relative strengths, economic costs and proper incentives. Unfortunately, the pending legislation would undermine that balance and extend the ILEC's monopoly powers under the guise of accelerating broadband deployment. Passage of H.R. 1686 and H.R. 2420 would jeopardize the ability of states to open local markets to competition and advance the goals of the Act. H.R. 1686 and H.R. 2420 would allow ILECs to transport data across local access and transport areas, or LATA, boundaries immediately. In essence, ILECs would become long distance carriers of data, something they cannot currently do under the Act until they meet the Section 271 requirements to open their local markets to competition. If the Bell companies were allowed to transport long distance data traffic without first having to comply with the Section 271 checklist, state commissions and the FCC would lose the primary tool for promoting local telephone competition.

Circumventing the incentives that Congress put in place would derail ongoing efforts to bring advanced services to local markets. States currently in the midst of arbitrating market entry disputes regarding advanced services could be required to revisit previously resolved issues. This legislation would give the ILECs a competitive advantage in broadband deployment without providing in return any demonstrable gains in local competition. Furthermore, history has shown that major shifts in telecommunications policy lead to contentious, multi-forum litigation in the courts, before the state commissions and before the FCC.

Data now accounts for more than 80% of the traffic on the public network and is projected to account for as much as 90% in three to five years. H.R. 1686 and H.R. 2420 would prohibit both the FCC and the states from promoting the deployment of high-speed data services. Until a recent FCC order became effective, competitors were unable to utilize line-sharing, and therefore had to use a separate line to provide DSL services. This hindered access to broadband services by artificially raising the prices for these services.

Although the rationale for the legislation may have been to extend broadband services to underserved areas, this legislation could actually undermine that goal. The primary factor stimulating deployment of broadband infrastructure is competition. In those areas where competition exists, the Bell companies have provided more broadband services at lower prices than where there is little or no competition. For example, SBC reduced its DSL price by more than 40%, including Internet access service, in response to competitive pressures. Similarly, Bell Atlantic reduced the price of its Infospeed service by approximately 20% in response to increased competition from cable companies and competitive carriers.

In addition, there are increasing numbers of companies who are willing and able to provide data services. These companies have already begun to establish the facilities to provide these services. For example, in Maryland, like most states, broadband services are proliferating. To date, we have authorized over 100 competitive carriers, half of which are facility-based and many of which provide broadband services. Nationally, we have experienced a 50% increase in DSL lines in the first three months of this year alone. So clearly we are moving in the right direction. Yet residential markets are not experiencing robust local competition. Competition is still too nascent to abandon the pro-competitive elements of the Act.

Finally, I am also troubled by the legislation's provisions that would replace the Telecom Act with the Sherman Act as the means for prohibiting anti-competitive activities by ILECs. At this point, legislative changes to the current legal and regulatory structure would exacerbate an already litigious relationship between ILECs and their potential competitors. Since litigation has been a central factor in delaying full implementation of the Telecom Act, and because antitrust litigation is extremely expensive and protracted, it seems clear that a shifting emphasis to the Sherman Act would delay rather than hasten broadband deployment.

I have attached to my testimony NARUC's resolution opposing legislation like H.R. 1686 and H.R. 2420. This resolution was passed unanimously by the NARUC Telecommunications Committee in March of this year. I have also attached a May 11, 2000 letter to Chairman Hyde sent by, among others, NARUC President Bob Rowe and Telecommunications Chair Joan Smith. This letter also explains our reasons for opposing H.R. 1686.

We share the Committee's desire to deploy broadband services to all areas. We simply ask that you address broadband deployment in a competitively and technologically neutral way not by removing the Bell's incentives to open their local markets. This legislation is harmful to the development of local competition and could actually delay the deployment of broadband services. Therefore, we urge you to oppose the passage of H.R. 1686 or H.R. 2420.


LOAD-DATE: July 20, 2000

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