More on A WSJ Letter to the Editor They Wouldn't Care toPublish (which I mostly agree with)

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: "Joseph H. Weber" <jweber () spri com>
Date: Tue, 07 Jan 2003 17:49:49 -0500
To: dave () farber net
Subject: Re: [IP] A WSJ Letter to the Editor They Wouldn't Care toPublish
(which I mostly agree with)

Dave,
 
Thre's always a lot more heat than light in the discussions of these issues.
The costing standard - based on the theoreticl costs of building a new
network, requires so many assumptions that the results are almost
meaningless. It's plainly not an objective "fact" if those who benefit from
low prices can always "prove" that the costs are low, while those who
benefit from hight prices can always "prove" the opposite. All we can be
sure of is that (1) the actual costs on the books of the telephone companies
are much higher than the prices usually specified for unbndled network
elements (UNEs) and (2) the most popular and controversial of the UNEs, the
so-called UNE-P, is a combination of loop, switching and transmission that
is functionally indistinguishable from resold service. Furthermore, the
legislative standard for pricing of resold services in the 1996 Act (retail
minus avoided cost) leads to much higher prices than is ordinarily charged
for UNE-Ps.  Thus the current arrangement has two markedly different prices
for the same service, and they can't both be right. This is but one example
of the kinds of problems this regulatory regime exhibits.
 
Everybody gives lip service to increased competition, but the devil is in
the details here. If competition merely means that one company is riding on
the facilities of another, with little opportunity for technolgical and
service innovastion, is that really what we want? If competitors cannot
economically supply services on their own to certain market segments,
perhpas those market segments should not be artificially made "competitive."
Nobody is arguing about the need for easy interconnection, which is of
course necessary, but the requirement that one company allow another to use
its facilities probably goes too far. I realize that this is in the 1996
Act, but it's well known that was a Christmas tree. I have always thought
that the requirement to interconnect at any "technically feasible point" is
a pernicious prescription that can and will lead to all kinds of problems,
technical and economic.
 
Competition is best spurred by investment in new technology rather than in
arbitrage schemes. Things would be simpler, and probably better for the
indsutry and the public (if not for all the competitors) if interconnection
standards were specified and enforced and all governmentqal restrictions
preventing competition removed, including the UNE program. The result would
be a lot less time spent arguing before commissions and courts, and a lot
more rapid movement toward a real competitive environment.
 
Joe Weber
Strategic Policy Research
Bethesda, MD

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