IP: Metcalfes Column Bashing Reed Hundt This Week in InfoWorld

[David Farber <farber () cis upenn edu>]

From: Bob Metcalfe <metcalfe () infoworld com>


My column in InfoWorld this week, FYI:


InfoWorld / From the Ether / Bob Metcalfe


May 19, 1997


FCC's Hundt takes a step forward, two backward with subsidies and taxes


Federal Communications Commission Chairman Reed Hundt must see himself as
Robin Hood. He robs rich urban business data telephone users and gives
Internet access to poor schools and libraries (S&Ls).


And Hundt is bucking too hard to be President Albert Gore's Secretary of
Education.


For now, Hundt's FCC has done little to de-monopolize the telephone
industry's rapacious local exchange carriers (LECs).


In Hundt's defense, he's not our only FCC commissioner. He's up against a
60-year accumulation of failed FCC regulations that have left, for example,
T1 lines costing maybe 10 times more than they would if LECs got meaningful
competition. (See "After steering clear of Microsoft's pathway, Ferguson
takes on FCC," May 5.) And Hundt's hands are tied by Congress and the
ridiculous "universal service" requirements of its Telecommunications Act
of 1996.


On May 7, Hundt's FCC cut $1.7 billion from the $25 billion paid by
long-distance telecommunications providers to subsidize LEC monopolies. The
long-distance telcos promise to pass these billions on as reductions in
charges for long-distance telephony. Thanks, Chairman Hundt, for this step
forward, even if the LECs soon file lawsuits defending their inflated
monopoly profits.


The FCC also just voted to spend $2.25 billion per year subsidizing
Internet access for schools and libraries. Hundt is big on redoubling
Washington's failing efforts in socialized education.


With a "historic" bipartisan budget deal only recently in place, the
Clinton administration had to find new off-budget federal moneys for
education. Robin Hundt apparently thinks it's OK, when our children are at
stake, to rob from telcos and their rich customers.


What's worse, Hundt ignored my pleas to forward his subsidies directly to
the S&Ls. Instead, the FCC voted to force Internet service providers (ISPs)
to give S&L "discounts," playing into LEC hands by forcing ISPs to beg
telco regulators for reimbursement. (See "Telco Empire strikes back with
monopoly embrace and subsidies for schools," April 28.) Clever, but not
appreciated, Chairman Hundt, this step backward.


So then to pay for subsidized S&L Internet access, the FCC also voted for
new charges on second telephone lines. Hundt calls these charges
"reductions on subsidies" for second telephones, and if you won't swallow
that, these charges are, Hundt says, less than 4 percent of the $40
Internet users pay each month for their second lines and to ISPs.


Hundt's second-line charges are decried as "modem taxes" by Dennis Hayes
and his Association of Online Professionals and by Internet father Vint
Cerf at MCI, among others. Another step backward, Chairman Hundt.


Since the Telecommunications Act of 1996, which was supposed to bring
competition to local telecommunications, LECs have been merging. Bell
Atlantic just had its merger with Nynex approved by Washington -- which
won't let Staples buy Office Depot -- because the two neighboring telcos
would not be competing anyway. And why not? Have the LECs agreed not to
compete in one another's territories? Aren't such "horizontal" agreements
illegal under Section 1 of the Sherman Act?


And now it's rumored that Bell Atlantic and Nynex will lay off 10,000
people, triple earlier estimates. How are we supposed to take this news?
Should we cheer because reduction in costs will reduce prices? Or should we
lament the announcement because the LECs are supposed to employ lots of
people -- a 60-year-old jobs program that has been inflating costs and
marking them up for rich telco customers to pay?


It's often said that Robin Hood in the 12th century, like Reed Hundt today,
robbed from the rich to give to the poor. Fact is, Sir Robin of Locksley
robbed from usurpers who oppressively taxed subjects of the crusading King
Richard. When King Richard returned, Sir Robin joined him, ejected the
usurpers, and ended oppressive taxation. I'm sorry, but Marxists just can't
have Robin Hood.


Reed Hundt is not Robin Hood when he taxes modems. He plays the Sheriff of
Nottingham to Albert Gore's Prince John.


Join me in opposing the FCC's new modem tax. We will not be alone -- see
http://www.aop.org. See also http://www.fcc.gov. Send your complaining
e-mail to Reed Hundt at rhundt () fcc gov. Write to your representatives in
Congress.


We need de-monopolized telecommunications. It may take a whole new batch of
politicians to do it. So I wonder: Who will be our King Richard, and when's
he coming back?


Copyright =A9 1997 by InfoWorld Publishing Company




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Dr. Robert M. ("Bob") Metcalfe
VP Technology, International Data Group
InfoWorld Columns: www.infoworld.com
Mail: metcalfe () infoworld com
Telephone: 617-534-1215
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