In August, the Federal Communications Commission (FCC) issued rules to show how new competitors can enter the local markets for telecommunications (em forever relegating local telephone monopolies to that switchboard in the sky. But, as the FCC translates the Telecommunications Act of 1996 into agency regulations, the handwriting is already on the wall: Converting the old monopoly to a competitive system won't be easy.
FCC chairman Reed Hundt has said that his agency will take few other actions in which mistakes could prove so costly, as with the new rules for local telephone competition.
Moving toward competition continues to be the right course. Yet major decisions often deal only with the economic theory of competition (em not the realities of local economies. Telecommunications services can exert an enormous impact on small businesses and rural areas. When regulators make decisions that will affect an MCI, a Bell Atlantic, or a TCI, they should also consider the economic impacts on a Fresno, a Peoria, or a Lonesome Gulch.
The California Public Utilities Commission (CPUC), for example, recently proposed a program to transfer the once-subsidized "universal service" program to a newly competitive market in a way that will inappropriately focus on the race to compete (em rather than assuring adequate conditions for competitive entry. That program (CPUC Decision 95-07-050, July 19, 1995) was reviewed in August 1996 by an administrative law judge. The judge issued an initial decision that was slated to come before the CPUC once more for final review, perhaps sometime this month. (See, Rulemaking on Universal Service, R.95-01-020, Investigation into Universal Service, I.95-01-021, Aug. 5, 1996.)
Glaring Misjudgments