It was 1956 and life was simple. If
you wanted a telephone, easy. You had one choice–an
AT&T Western Electric black rotary phone. For long
distance, again you had a single company–good old Ma
Bell, AT&T. And for local service, well there were
2,000 local companies, but only one for the place you
lived. And 85 percent lived in AT&T country.
Ma Bell was ubiquitous, and hardly innovative. (That
rotary phone was created in 1919; not put on line
Then came the “Hush A Phone” decision,
allowing private consumers to hook up other phones
and even fax machines to their lines. A dozen years
later, alternative long-distance carriers gained permission
to hook into the Bell’s network.
Then in 1984, thanks in large measure to AT&T
refusing to fairly open its network to MCI and Sprint,
Ma Bell was broken up into AT&T long distance
and seven independent regional Bell operating companies.
The success of long-distance competition led Congress
in 1996 to try to get competition rolling in the local
market with a new telecommunications act.
The Bells agreed both in negotiations of the act
and in agreements that allowed them to merge into
four regional local phone giants that they would open
their loops at affordable rates to competitors. But
implementation of that act has been dragged out by
the Bells’ litigating and lobbying.
Their refusal to deal fairly with competitors–reflected
in billions in assessed fines and other levies–forced
many competitive local exchange carriers into bankruptcy.
The Bells, in short, created much of the current financial
mess in telecommunications.
At last, though, the FCC got it right. It set up
pricing guidelines that state utility commissions
began to implement two years ago for the leasing of
the Bells’ systems, including the whole platform (so
called UNE-P). The FCC reaffirmed those rules last
The Bells naturally don’t like it. They are back
in court to maintain their monopoly stranglehold on
local phone service. But competition should not be
cast aside to protect monopolists.
Competition in long distance brought in dramatically
lower prices for consumers, who’ve seen the cost of
an average call drop from 35 cents a minute (62 cents
in 2001 dollars) in 1983 before AT&T’s breakup
to 10 cents a minute now.
The only place in telecommunications where costs
to consumers have risen has been local phone service.
Even as the average household monthly phone bill for
long distance dropped from $20.85 a month in 1995
to $12.39 a month in 2002, local phone bills have
climbed–from $29.82 a month to $36.33 a month.
As was the case with MCI and Sprint who leased much
of AT&T’s network to provide long distance before
building out their own systems, new local players
need affordable access to the Bell networks legacy
if they are to build a customer base and then grow.
If that creates a little more telecom messiness for
a time, so be it. A lasting competitive framework
is vital if consumers are to get products and services
they want at prices that they can afford.
It ain’t as simple as 1956, but neither are modern
communications capable on old black rotary phones.
–Duane D. Freese, formerly on the editorial board
at USA Today, is a columnist and editorial consultant