cr> Telecom Regimes


Sender: •••@••.••• (Richard K. Moore)

Dear c-r,

        I'm glad to see some serious debate regarding telecom regulation
beginning on this list.  I've put forward the argument that our previous
regulatory system was superior to the new Reform-bill regime -- the latter
being intentionally designed, I claim, to foster a non-competitive,
monopolist marketplace.  Further, I offered an analysis (re: Straits of
Consumption) of how the economics and pricing are likely to develop for
info-products, and concluded that non-commercial users will probably find
themselves out in the cold in cyberspace.

        Craig Johnson responded that the previous regulatory regime was due
for a change.  That observation in no way challenges my analysis of the new
regime, but it does invite us to take a closer look at the previous regime,
which is evidently widely misunderstood.

        Admittedly the previous regime can be characterized as patches upon
patches.  Starting from (essentially) a single-vendor vertical-monopoly
telecom market, we then patched-on the AT&T divestiture, in a series of
little patches which liberated one market after another from AT&T
domination, each patch usually spurred by some private anti-trust action.
As with any oft-patched system, there does indeed come a point where a
re-write is in order.  But when re-writing a system, the first reasonable
step is to look at the old one and ask questions like:
        - What functions does it perform?
        - Which strategies are working well?
        - Which strategies need rethinking?
        - What new functions are needed?

        Without such an analysis, we're ignoring everything we've learned
-- as regulation architects, we'd be grossly irresponsible.  It'd be as if
a building architect were to ignore the fact that a previous building on
his site slid down the hill last time it rained.  (Ignore the past at your
peril, and all that.)

        The AT&T divestiture, in the large, was about breaking
communications into independent market "layers":
        - local loop
        - long-distance services (eg. MCI, Sprint)
        - terminal equipment (eg. phone-sets, extension cables, switches)
        - encoding mechanisms (eg. modems/multiplexing/protocols)
        - value-added services (eg. Tymnet, Telenet, Internet)

        These layers were not all "liberated" at once -- non-Bell modems
came early (the Carterphone Decision), while value-added services and
long-distance reselling came later.  This market-layering strategy is a
sound one -- it has succeeded in encouraging innovation, birthing new
markets, keeping prices reasonable, and maintaining reasonable continuity
all the while.

        Each layer in this previous regime had its own characteristics:
some (like terminal equipment) were fully market driven, while others
(local loop) continued the earlier regulated-monopoly model, and others
were mixed-mode.  These differences reflected technical and market
realties, and were tuned from time to time as the industry continued to

        It seems to me that this fundamental layering strategy is an
admirable one.  It creates multiple "level playing fields" by factoring the
marketplace along natural lines of cleavage.  Indeed, the layering strategy
makes EVEN MORE SENSE in the cyber future, where we now have information
services and public networking (at least) as new "playing fields" to add to
the mix.

        It is this layering system which has provided commodity
communications and commodity equipment -- out of which it has been possible
to assemble Internet from off-the-shelf components and services.  The
natural progression would be for bandwidth to become ever cheaper, and for
cyberspace to evolve naturally as Internet goes through successive upgrades
or re-writes, or competing networks give it a run for the money.

        If a new Telcom bill is overdue, fair enough, but throwing out the
baby with the bathwater is not progress.  The fact is that everyone is
better served by layered markets than by one monolithic, unregulated,
monopoly-inviting marketplace.  Everyone is better served, that is, EXCEPT
for the large telecom companies.  They face the prospect of fighting it out
in their competitive commodity-bandwidth layer, while others make huge
profits in the new information market layers.  Understandable that they'd
fight for a bigger piece of the pie -- but NOT understandable that the rest
of us allow ourselves to be willingly bludgeoned back into the
anti-competition dark ages -- so that the telcoms can control the WHOLE

        To those who say "We should wait and see how things pan out", I say
"We've been there, done that, and should know better!"  There's no mystery
about where things are heading, at least not among the players involved.
They knew exactly what they wanted, hired enough lobbyists and
congress-folk to achieve it, and are now engaged in a merger-frenzy -- as a
prelude to their anticipated feeding-frenzy.  I invite everyone to wake up
and smell the coffee, if they haven't already.  This is not the time for
laissez-faire know-nothingism.

        I may have an advantage over some of you, in that I've lived
through most of the changes I've been describing.  I can remember (as an
adult) when it was illegal to attach a non-Bell phone set to your line, to
use a non-Bell modem or extension cable, or to concentrate two calls onto
one wire.  I worked for the company that first won the right to sell
value-added networking, and I've participated in developing many of the new
technologies that were spurred by the competition-encouraging regulatory

        It is at a visceral level that I respond to the naked power-grab
represented by the Telcom bill.  I see years of progress (in which I was
professionally involved) being scuttled by a band of pirates who were able
to smuggle their way on board the Titanic II (aka: "USS Contract On
America").  The deceptive, hypocritical rhetoric surrounding this pirate
raid (again I refer you to PFF's Magna Carta for the classic exposition)
has been shallow and illogical in the extreme.  We must break free of
industry-sponsored mythology (which ignores, for example, that the Internet
was developed at government initiative) if we are to achieve useful
discourse on these topics.


    Posted by Richard K. Moore  -  •••@••.•••  -  Wexford, Ireland
     Cyberlib:  www | ftp -->

 Posted by Andrew Oram  - •••@••.••• - Moderator: CYBER-RIGHTS (CPSR)
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