Sen. Hollings Introduces Bill To Break Up Baby Bells

Eeh... That would be nice, but then you would have all these little companys that go bankrupt and all.

Oh please,
I really doubt on a level playing field, Verizon could stay in business. I really dont think ATT, Sprint, BT and MCI are little companies either. So get over it, people are waking up to the Monopoly nightmare and they want change.

said by Estes:

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So get over it, people are waking up to the Monopoly nightmare and they want change.

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I'm no economist/financial planner, so I'm sure someone here will see the flaw in this, but here's a proposition:

Establish a national (or, like the power companies, regional grids) infrastructure management group comprising the telecomm industry players to which all telecomm companies contribute funding. This entity is to be owned by the member companies, and run as a non-profit, and is to be charged with keeping the long-haul backbones and local offices/lines up and running (Ma Bell, anyone?). The other players utilize the services of the national network provider, and make their money providing local, differentiated services to business and consumers. The charter of the infrastructure group is such that it acts in a network management/common carrier capacity only, leaving all add-on services/content to the local entities.

Granted this is not a full-fledged thought, but I throw it out as a starting point for discussion. Any takers (flamers -- please go elsewhere)?

One thing you're wrong about is that it won't be non-profit. The only way it would end up non-profit is if it was socialized. Fritz ain't suggesting that.

said by 2farfromCO:

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One thing you're wrong about is that it won't be non-profit. The only way it would end up non-profit is if it was socialized. Fritz ain't suggesting that.

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Depends on how it's set up. If the member companies own it, it's in their interest to keep it non-profit. Or, if it turns a profit, distribute the profit among the members on a pro-rata basis. The point being to set up one, or at most, a few infrastructure provider(s) to do what it takes to keep the network humming, and let others make money on the actual provisioning of services. A wholesaler/retailer model, if you will.

I think your thinking is off on this one guys. Do any of you remember what happened when GTE/Verizon had to split up its operations last time. It was a nightmare. Do any of you guys remember what happened to MCI/UUNET when they had to split up there operations, ?? When there Frame network failed they couldn't get service back up and running for days (week) because when a company like that splits up, it isn't just for public emotion, they LITERALLY Split up, and can't interface with each other as if they were the same company, if in the example of MCI or even AT&T had the exact same problem, they were one company, then they would have been able to interface with internal departments, much better and would have been able to establish service for its 99.3% of its customers that were down for that week. If they force the baby bells to break up, that is going to confuse EVERYONE, including, you john Q public, and it is going to confuse these baby bells even more.. and that is a scary thought.. I think they need to De-regulate these braodband services, and quit treating them as if they were 56K dial up lines. every house in america needs this, and The only way to get it to them is to unleash all this DARK FIBER that is here in the Good ol' US. Verizon can't release there Complete GNI because there isn't anywhere they can do that.. just in metro areas, but for metro areas, they can better serve the public with sonet ring networks, and ATM/FRAME RELAY.

Literally for everyone person that complains about DSL, I know, just as well as you guys know, that there are ten people that don't have problems. DSL in general is an infant product, and it is immature, it will take awhile before it is 100% stable, and you get these agressive service level garuntee's like Frame relay, and ATM give you. it is just too young to expect anything better than what it is.. And you guys are paying $39 + a month, what are you complaining for. . this is cheap internet access. if these connections are costing you so much money, everytime it goes down. Don't you think having the right connection in there will give you the ability to be profitable, and pay for the more expensive services, like Frame relay, and T-1??

Quit Whinin.!

You got a good point

I will stop complaining when my DSL providers stop going under. Verizon and the baby bells do nothing but hurt DSL consumers. Until then broadband is a farce....

Hollings-Inouye-Stevens vs. Tauzin-Dingell in a no-holds-barred cage match to the death! Who shall come out victorious?

quote from washtech.com:

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"We have the same great affection for Sen. Hollings' structural separation bill that he has for our broadband bill," Tauzin spokesman Ken Johnson said. "Perhaps a compromise is on the horizon."

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I think a compromise is definitely on the horizon. The big question is what form that compromise will take.

There has to be a third way. I do not think the "right" solution lies somewhere between these two proposed bills.

Simply forging a compromise between old tired structural separation proposals and old tired deregulation proposals is not going to get broadband moving forward in an aggressive, competitive way which pays dividends to all stakeholders (customers, investors, employees, executives, the US' strategic interests, whatever).

The difference is that the old tired deregulation proposals have been tried and have all failed miserably in telecom and in airlines. The separation proposals haven't been tried yet. I think it's time we try them.

It's so easy for those who have little knowledge of telephony operations to suggest that this is an easy fix to the problem. Do you have any idea of the costs involved? Remember that these are publicly traded companies with shareholders that expect a return on their investments. How many are going to say "sure, go ahead and break up the business and let me pay for it."? YOU will pay for it. In more ways than one - rate increases to cover costs (either direct or passed on to the CLEC, which you will still get), service delays, etc. And if it doesn't work, do you think putting them back together would be cheap, quick and easy (if even possible)?

This is just a bad idea and one that is likely to get little support, except from the AT&T and VoicesforChoices (CLECs) folks.

It's not left vs right - it's one greedy monopolistic bastard industry vs another, using politics and legislation to get for free what they can't earn through innovation or hard work (or even good customer service):

ERNEST HOLLINGS, Dem SC: Top Contributors by dollar amount, 1995 - 2000 Senate Election Cycle:

1. AT&T , $35,610
3. Time/Warner, 33,500
10. Sprint, 22,950

WJ 'BILLY' TAUZIN, Rep LA: Top Contributors by dollar amount, 1998 - 2000 Congressional Election Cycle:

1. Verizon Communications, $13,750
4. SBC Communications, 10,250
9. National Cable Television Association, 9,999

With numbers like that, it seems to me that the customer loses either way.

It's high time the Bells get broken up! Call your representative and tell them to support this bill! This bill will be good for everyone unlike that T-D joke. This is the one that needs to be passed and signed into law ASAP!!!!

I think you need to temper your enthusiasm just a bit. It's a long way from becoming a reality. Sponsoring a bill doesn't guarantee it's passage.

Breaking up the RBOCs will probably not have the effect that you seem to expect. Good for everybody? Not likely. Increased operations costs will likely be passed on to the customer, not to mention potential service delays due to the inability of separated business units to work cohesively.

This is NOT a silver bullet.

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not to mention potential service delays due to the inability of separated business units to work cohesively.

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Ha!! I love it. Like there could be any more delays in the current levels of service that we're already seeing from the Bells. Anytime I've had to contact the local telco here regarding a service related issue, there is typically a 30 to 90 minute wait time on hold just to get connected to someone who will transfer me to someone else and go through the same thing again. Kinda like "rinse and repeat". Face it, it really can't get much worse than it already is.

Are you out of your mind? The intention of this bill and other bill proposals like it is not to cause death to the RBOC's, nor is it to punish them or cause them to offer less services...

It is comments like these that show how much you are just for anything that will make companies go bankrupt vs. being for legislation that will cause more competition.

boogie74

Yep, let's create problems because now working with each other will not be allowed. Gonna lead to plenty of finger pointing when things go wrong, slow fix times as new databases are created to track repair, etc... you get the picture. Looks like Hollings got his full dose of stupid pills.

The one posted idea that caught my eye was that this infrastructure company would actually be shared ownership by the retail services companies. That way it would act in everybodys best interest. The only problem there would be how to divide the ownership. Currently, the RBOCs own 100%. If they are force to share it, then in effect they are being force to give the CLECs their infrastructure for free and will never go for it. So we are going to have to buy it from them. How about this. I will give up my $300 tax rebate check to be put in a large fund to buy the infrastructure to form this infratructure company that would be shared by the CLECs. Yeah, I know, we shouldn't have to pay for this from taxpayer money blah blah blah. By golly, if my $300 will fix the entire telecom industry. It will be the best $300 I've ever spent, and I'm all for it. WHO'S WITH ME??!??!!!?!?!

said by 2farfromCO:

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How about this. I will give up my $300 tax rebate check to be put in a large fund to buy the infrastructure to form this infratructure company that would be shared by the CLECs.

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Cute, a little off topic, but you do realize that your tax rebate check is really just your refund from the tax cut that won't happen next year?

Yeah, but spending the $300 to fix the telecom industry doesn't put us in any more trouble than simply rebating it. Either way it's money that can't be spent in the general budget that gets removed from the surplus. What you could say is my idea is a big government project of tax-spend economics that has clearly fallen out of favor, but so have unregulated abusive monopolies so pick your poison. I chose the one where every person has a say not just wealthy stockholders. Government is far more accountable than a monopoly. That is where the "less government" hype is wrong about.

said by 2farfromCO:

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If they are force to share it, then in effect they are being force to give the CLECs their infrastructure for free and will never go for it. So we are going to have to buy it from them.

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Not necessarily. Yes, they give up outright ownership of the network infrastructure (lines, switches, other physical plant), but gain ownership in the newly formed entity that will exist for the purpose of maintaining said physical plant. Others wishing to tap the network could put up the $$$ to buy into the partnership (or however the entity is legally structured) and thereby gain access rights to the shared network. So long as the overall network supports it, the local players would be free to provide whatever services they felt could be profitably marketed.

Again, I'm no expert, but doesn't IntelSat operate on a sort of consortium model such as this?

said by 2farfromCO:

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The one posted idea that caught my eye was that this infrastructure company would actually be shared ownership by the retail services companies. That way it would act in everybodys best interest. The only problem there would be how to divide the ownership. Currently, the RBOCs own 100%. If they are force to share it, then in effect they are being force to give the CLECs their infrastructure for free and will never go for it.

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This will never work. The idea I posted in one forum was for the incumbent to simply own the physical infrastructure, but be prohibited from operating over it. In essence the only carriers would be "competitive." No incumbent carrier would exist; the incumbent would simply be the "landlord" who would lease its capacity to competing tenants at market rates.

In contrast, your model proposes that each carrier, or tenant, own in common the physical infrastructure, the real estate. This won't work because there has to be ONE disinterested party in control of the physical infrastructure who would not tend to favor one carrier over another. With common ownership there are ALWAYS problems. If you don't believe me consider how condominiums are operated. Too many cooks in the kitchen spoil the soup; nothing gets done. Nevertheless, KUDOS, 2far, for broaching a new topic other than your cable franchise.

said by 2farfromCO:

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So we are going to have to buy it from them. How about this. I will give up my $300 tax rebate check to be put in a large fund to buy the infrastructure to form this infratructure company that would be shared by the CLECs. Yeah, I know, we shouldn't have to pay for this from taxpayer money blah blah blah. By golly, if my $300 will fix the entire telecom industry. It will be the best $300 I've ever spent, and I'm all for it. WHO'S WITH ME??!??!!!?!?!

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Unfortunately, this won't work either. Idealistically, I pondered this notion several years ago when I first started to study the last mile. I postulated what if the Federal government under its eminent domain powers granted it by the Fifth Amendment decided to condemn the last mile and provide the with just compensation. The Government could then pass title and operational responsibility for such plant & equipment to the states, who then could "sub" it out to the political subdivisions of each state whereby the local loop would be as open as the public rights-of-way. But then I figured what a mess in negotiating out all the details, not to mention lawsuits appurtenant to any eminent domain proceeding. I fathomed it would take 10-15 years to litigate and cost at least twice the cost of the taking. So, no, a government purchase of the last mile ain't gonna work. It needs to accomplish a more open platform through regulation and not a government taking.

I support what some states are trying to do in the way of "structural separation," which separates out certain business of the incumbent from others -- completely into two separate companies. Imagine if the government forced the telcos to separate their carrier business from their business as owner and operators of the physical infrastructure, then prohibited the incumbents from operating as a carrier over their own infrastructure. IMHO, only then would there be true competition along the loop, and only then would there be an incentive for the incumbent to spend the money necessary to make the last mile bandwidth optimal, which it the antithesis of what it is today.

By removing the owner of the plant from the carrier business, its profit motive is then aligned with all the competitive carriers, who are in effect its tenants. A landlord would certainly invest in a new office building if it were convinced that its present tenants would compete to lease additional space to serve the demands of the market place. Similarly, the owner of the telco infrastructure would have the same incentive to push FTTH if it were convinced that multiple carriers would compete fiercely to operate its networks over that physical layer.

But, alas, we can only dream of this business model because most of the politicians in Washington don't have the cohones to adopt such legislations, particularly when the incumbents continue to line their pockets year in and year out. JMO.

[quote IML2000]With common ownership there are ALWAYS problems. If you don't believe me consider how condominiums are operated. Too many cooks in the kitchen spoil the soup; nothing gets done. Nevertheless, KUDOS, 2far, for broaching a new topic other than your cable franchise.[quote/]

This hair-brained idea would make condo associations look good by comparison. I'll second the Kudo's for 2far's new topics.

said by lml2000:

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By removing the owner of the plant from the carrier business, its profit motive is then aligned with all the competitive carriers, who are in effect its tenants. A landlord would certainly invest in a new office building if it were convinced that its present tenants would compete to lease additional space to serve the demands of the market place. Similarly, the owner of the telco infrastructure would have the same incentive to push FTTH if it were convinced that multiple carriers would compete fiercely to operate its networks over that physical layer.

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Umm -- that was sort of my original proposal (not 2Far's)? That the various companies only own and fund pieces of an infrastructure firm that is prohibited from offering services *other* than infrastructure.

FWIW, my father was president of the board of directors first of his co-op and, after conversion, his condo association. I can tell you -- things can get done. All it takes is a board willing to do the work required.

said by wtansill:

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said by lml2000:

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By removing the owner of the plant from the carrier business, its profit motive is then aligned with all the competitive carriers, who are in effect its tenants. A landlord would certainly invest in a new office building if it were convinced that its present tenants would compete to lease additional space to serve the demands of the market place. Similarly, the owner of the telco infrastructure would have the same incentive to push FTTH if it were convinced that multiple carriers would compete fiercely to operate its networks over that physical layer.

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Umm -- that was sort of my original proposal (not 2Far's)? That the various companies only own and fund pieces of an infrastructure firm that is prohibited from offering services *other* than infrastructure.

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FWIW, what you quote me as stating I did not attribute to 2far, but to myself in a post here several months ago. What 2far proposed is some form of common or joint ownership of the physical infrastructure whose ownership on an individual basis would represent the carrier industry. I think this structure would be flawed because there would be too many interests and nothing would get done efficiently or timely.

I sit on the Board of my HOA, a single family detached subdivision; I know all about common ownership issues and getting things done. Kudos to your dad for getting thing done with his Association, but such a story is far and few between, and arguably not at all applicable to telco infrastructure.

Can you imagine what our telecommunications industry were like if the incumbent facilities were not owned by the RBOCs, but by a consortium of CLECs, LD carriers, and incumbents, each with their own native businesses, each with their own agenda? Nothing would get done. It would be like stepping out of the present pot of boiling mess into another. My proposal has always been to force the incumbents out of the carrier business altogether, or in the alternative, if they wish to remain a carrier, sell their entire incumbent infrastructure to a unrelated third party who would "fit the bill."

The goal here would be for non-discriminatory ownership and operation of the physical layer so that each carrier could fairly compete over such infrastructure. The key here is separate ownership and maintenance of the facilities from the carrier operations, much like ownership of a toll road does not include ownership of all transportation vehicles allowed to travel over it. What we have now is analogous to a toll road where the owner of the road also operates a fleet of vans, buses and trucks that supposedly competes with other fleets of vans, buses and trucks not owned by the owner of the road. This model is inherently inequitable and inherently flawed. Its about time the folks in Washington realize how poorly structured the last mile is in terms of opening up competition. Under the present structure the ONLY TRUE competition will be among those owners of the physical infrastructure, be it telco, cable, over builder or fixed wireless. This is pretty much a fact today along the last mile. JMO.

The RBOC's pushed TD and if it passed in it's current form they would not have gotten the cash cow but the whole damed herd. Sen Hollings is exactly right. Most of the RBOC's stopped deploying DSL citing the "it too expensive clause", they then turn around and back legislation the would require them to complete nation wide deployment in five years. I know Verizon has done this.

Anyway this will serve as a wake up call to the RBOC's and more importantly it let's us all know that befor TD passes it will change significantly.

The RBOC's haven't stopped deploying DSL for one... The only state that I have seen this happen in any form in is Illinois. The situation in Illinois is the fact that they passed a bill that requires Ameritech to offer access to any unbundled network element that any competitor wants access to for less than what it costs Ameritech to provision to begin with (including RT's)- in fact there are many prices that the ICC has deemed are to be set at $0.00. This is what makes it less profitable to offer the service than to not- when you have to invest in your competition's business.

Everywhere else, CO's are being deployed left and right, RT's are being either installed new or are getting DSLAM's installed in them, and sales are booming. In the last year, DSL has gone from being available to 1 in 100 or less to now 1 in 3- and it is quickly catching up to 1 in 2.

Nothing is stopping any company from provisioning their own fiber or copper except money. To claim that it is impossible for ABC CLEC to do it, why would anyone claim it is possible for RBOC's to do it?? Where do you think the money goes to provision fiber deeper into neighborhoods? It isn't just all there to begin with... This is the majority of the cost. To require RBOC's to do the work, pay the money, then allow others resell the fiber into the neighborhoods is ludicrous. Why can't other companies do the same? Why can't other companies pay money to install RT's of their own? This is what RBOC's are doing now, it isn't unfeasible moneywise...

boogie74

Sorry, I shouldn't have lumped all RBOC's together. I live in Verizon (Florida) teritory. I know for a fact that in the Tampa area Verizon is not deploying to remote terminals. I have alot of contacts in Verizon and they all tell me the same thing, "the remote terminals will not be made DSL operational until the unbundling requirement goes away". I was told this in Jan 2001 and didn't here about TD until Apr 2001. Officially the company cites the "it's too expensive clause". I was with GTE before the merger but my business unit was split off to make the merger happen. As a matter of economics I went with the new company. I tend to believe the people I used to work with when they tell me that Verizon doen't want to unbundle at the remote terminals. For my part I made a complaint to the Florida PSC who forwarded the complaint to the FCC. The FCC has investigated, found merit to my complaint and as of last week has sent it back to the Florida PSC for action.

This little snapshot of Verizon tactics is one of the reasons Sen Hollings introduced his bill. We can all complain about how "unfair the current law is", we don't have to like it but we do have to comply with it and that includes companies like Verizon.

Was it fair to breakup Ma Bell? The Baby Bells act like they've been around since the begining, overlooking the fact that if it weren't for legeslative action they wouldn't exist. Ma Bell built out the majority of the local loops and the Baby Bells extended the local loops with remote terminals. The Baby Bells have had the USF to aid them in build out of these remote terminals. So they should not be entitled to exclusive rights.

As many people have stated, neither Hollings or TD is the answer to the problem. As I see it, telecom (and utilities in general) have only two options 1) complete and utter deregulation where 3-5 major companies similar in strength compete for the customers over shared lines - or 2) complete regulation, there is only one set wires and infrastructure, and it is financially irresponsible to build more than one.

Breaking up the RBOCs will simply add billions of dollars to their expenses up front - who do you think would pay that money?????

And besides, they tried breaking up companies with DSL, and look at the terrible communication between say SBC and ASI. They are not allowed to share important customer info and helpdesk tickets, so the service combined is horrible.

But your first proposal IS Fritz Hollings' proposal. Telecom service companies compete over shared lines. That is Fritz Hollings' proposal.

It seems to me that we are missing the point. The point should be "fostering competition" and a "level playing field". If we look at the telecom companies as having two parts: switching and distribution, then it becomes apparent that a monopoly exists if you own both pieces. The issue becomes one of what is the best way to provide competition in an inherently monopolistic industry. One suggestion (proposed by Hollings) would suggest that making the distribution part (the local loop) some form of stand-alone entity that receives revenue from either an ILEC or a CLEC or whomever and treats them the same. This is essentially the same argument that allowed MCI to become a LD provider and we know that the LD business has expanded quite well (current price wars not withstanding).

Yeah, we can have one big happy phone company that will flow seemlessly from one exchange to the next. Then we can buy the world a Coke and sing in perfect harmony.... (Smells like communism to me. Former USSR less than 1 in 10 even has dialtone)

Seriously, the phone companies (small and large) are not going to fork over their outside plant to some sort of consortium. The only true competition in the communications world will be overbuilding. Right now we have two overbuilt networks which are quickly starting to resemble each other in products offered - Cable and Phone. Phone is highly regulated and pretty much a free for all for CLECs.
On the other side we have the Cable company which is allowed to do anything it wants. Maybe we should force the Cable company to open its network. Allow 'Cable CLECs'. This will give two paths to the home through multiple providers. But, we see how well the CLEC format works (see CLEC deathwatch for details). So, the big bad phone company single handedly ran each of these CLECs out of business. I don't think so. Non-facility CLECs are essentially "welfare" companies. They depend on the government for their existence, at the cost of the ILECs.
The only way to get true competition is to overbuild existing networks. The gov. needs to get its fingers out of the pie. If there is a demand for broadband services, somebody is going to find a way to get it there and sell it. That's the beauty of capitalism.

So instead of a few phone numbers to call you want more?

Makes sense to me

I'm all for it