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Perspective

Fortnightly Magazine - February 1 2000

the data local exchange carrier. DLECs purchase unbundled high-speed digital subscriber line loops from ILECs and connect them to the DLEC's newly constructed data networks, which are used by ISPs.

Recently, the FCC gave an additional boost to the DLEC industry by requiring ILECs to unbundle the data portion of the loop alone. This spectrum unbundling requirement may impact the joint cost issue surrounding the local loop. States will have to determine cost-based prices for unbundled loop spectrum and for voice services that are provided with only a small slice of the overall bandwidth available on the local loop. Consumer advocates undoubtedly will argue that voice prices should go down as the joint cost of the loop is shared over a broader set of services.

More Surprises?

Why do the main goals of the Telecommunications Act remain largely unachieved? Legislators, in drafting the Act, faced a difficult task. The Act would bring down barriers, threatening the bottom line for many firms with substantial political influence. The compromises that ensued ended up protecting special interests, undermining the Act's stated goals.

No one questions the idea of a national policy to encourage competition in telecommunications. At the same time, however, these unintended consequences will keep policymakers busy, working within the Act's labyrinthine framework to promote competition and the public interest. While that happens, expect the unexpected. The telecommunications industry will likely spring a few more surprises.

Trevor R. Roycroft, Ph.D., teaches courses on telecommunications economics, policy and regulation in the J. Warren McClure School of Communication Systems Management at Ohio University. He may be reached at roycroft@ohio.edu.

1 Preamble to the Joint Explanatory Statement of the Committee of Conference regarding the Telecommunications Act of 1996.

2 Telecommunications Act of 1996, §271(c)(1)(A).

3 Richard C. Juday anticipated strategically unbalanced traffic flows and coined the term "traffic-sucking blob" during 1995 Indiana Utility Regulatory Commission conferences on local exchange competition.

4 See In the Matter of Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic. CC Docket Nos. 96-98 and 99-68. FCC Order No. 99-38.

5 "FCC Rules Internet Calls are Interstate," New York Times, Feb. 26, 1999.

6 See direct testimony of Jerrold Oppenheim, Case No. 98-1466-TP-ACE. Public Utilities Commission of Ohio, Aug. 11, 1999.

7 See, for example, "California PUC Approves MCI, Worldcom Merger Plan," TR Daily, Aug. 31, 1998.

8 Approval of the MCI WorldCom-Sprint merger may face a tougher battle than other recent telecom mergers. See "FCC Staff Member Objects To Sprint-MCI Buyout Plan," Wall Street Journal, Tech Center, Interactive Edition, Dec. 13, 1999.

9 See Federal Communications Commission, In the Matter of Low-Volume Long-Distance Users, CC Docket No. 99-249, Notice of Inquiry, July 20, 1999.

10 See Consumer Price Index, November 1999, Bureau of Labor Statistics.

11 See "MCI's Art of Fine Print," Washington Post, Dec. 14, 1999, p. E01.

12 See Huber, P. W., Kellog, M.K. and Thorne, J., "Federal Telecommunications Law, Second Edition." Aspen Law & Business, Gaithersburg, Md., 1999, p. 1145.

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