IP: Re FCC appears poised to kill reciprocal compensation

[Dave Farber <dave () farber net>]

> Date: Fri, 20 Apr 2001 09:29:57 -0400
> To: farber () cis upenn edu, ip-sub-1 () majordomo pobox com
> From: "David P. Reed" <dpreed () reed com>
>
>
> I sympathize strongly with Glass's opinion (though he puzzled my by 
> misstating the source of the political pressure - it comes from the huge 
> ILECs, not the CLECs).
>
> But keeping reciprocal compensation is only a palliative measure against 
> the more dangerous problem - the web of regulations at town, state, and 
> federal levels that limit competitors from creating new, more effective 
> local-loop access network architectures.  This creates localized monopoly 
> power that prevents innovation in the access area.
>
> Killing reciprocal compensation, while keeping these regulations in place, 
> will indeed be anti-competitive and anti-innovation, ultimately 
> anti-consumer.  But a fair trade - eliminating reciprocal compensation 
> while at the same time allowing more access for competitors into the local 
> access network as I suggest shortly - would do everybody a lot of good, by 
> stimulating innovation, unblocking new services, and eventually lowering 
> prices.
>
> As an example, if I can figure out a way to wire a neighborhood more 
> efficiently than the current phone company technology (wireless Ethernet 
> being one starting place), why shouldn't I be able to go into business *in 
> that neighborhood* and offer "first mile" connectivity to any and all 
> CLECs that want to drum up business there?  I would then create a 
> competitive structure at a much finer grain than today's "Central Office" 
> structure.  Which would give me and my technology partners a huge 
> incentive to compete against the local telco.  Besides technology, we 
> could experiment with adapting rate structures to customer needs (for 
> example, we could offer charging plans like the cellular companies do, 
> that have much more variety and customer benefit.)  And we could create 
> the economic structure that would allow much faster innovation (wireless 
> Ethernet is on a much steeper capacity growth curve than current DSL-like 
> infrastructure, just as wired ethernet is).
>
> Those are just the first of the benefits we might see.
>
> Though the current Bush administration is supposedly more oriented towards 
> free market solutions, it does not seem that it is interested in 
> entrepreneurial free markets - just free markets as long as the incumbents 
> maintain their special privileges.



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