A Birthday Party: The Terrible or Terrific Two’s? 1996 Federal Telecommunications Act

Good afternoon and welcome to the Ohio Public Utilities Commission's observance of the Telecommunications Act's "Cotton Anniversary."(1) That's right. The first anniversary is paper, and the second is cotton. Now, paper made sense as a first anniversary observance. There were certainly tons of trees that were felled in the first year of implementation of the Act, with the new rules coming out and all the litigation, the court briefs and the judges' decisions.(2) And that's not over yet. Maybe the most appropriate thing we could do to observe the Act's anniversary is for every one of us to go out and plant a tree in the interest of avoiding deforestation. I really don't know what to make of cotton as the second anniversary gift. There's certainly been nothing soft and fluffy about what policymakers, lawmakers, the public, and the industries affected by the Act have been through in the past couple of years. It has been a bumpy process, full of twists and turns and unexpected developments. And through this wild fide, everyone who had anything to do with the birthing of the Act has awoken to the reality that the euphoric predictions of instant cross-industry competition that lots of people made when the Act was being debated,(3) and to which lots of people in government succumbed, were just that--euphoric--not real. What the past two years confirm are three fundamental principles: first, competition will come first to the markets where new entrants can achieve the highest margins.(4) This means business markets before residential markets, and urban before ex-urban markets. This principle rules like a tyrant. There is no getting around it. It is not a good thing or a bad thing. It's just a reality. Second, opening a market that is a near monopoly overall and a plain old monopoly in residential markets to competition is a hard, grueling process for new entrants, incumbents, and policymakers. At every single step of the way, there are colorable questions about how exactly the law and the rules were meant to be interpreted and applied. Policymakers have been drawn into the finest details of implementation in order to help make local entry work, and the work is still far from done. Third, it is essential that we not lose sight of the public interest and consumers' interests. These are two separate concepts that usually coincide, but not always. Consumers' interests are in lower prices and more choice.(5) The public interest is about that, too, but it's about more than that, as well. It's about the long term, about having a network that will serve today's needs and fulfill today's interests in price and choice, but will also serve tomorrow's needs for high bandwidth and reliability. It has become temptingly easy to be drawn into the battle over the minute details that need to be supervised, and to lose sight of the big picture. The first two principles counsel patience in the implementation process. They counsel the importance of staying the course and seeing through the process that the Act set in motion. The third principle, however, counsels impatience--restlessness. Because the success of the Act will be judged by the public--by consumers--and how well they judge those who passed the law and those who are charged with implementing it. This is what I want to address today. Instead of talking about the Cotton Anniversary, I think we should be thinking about what the Act and its implementation will mean and look like ten years after its implementation. That is the frame of reference that should be relevant to us, and we should be focusing on what it will take to make the public judge the Act a success then. I'm not saying we should run away from the responsibilities that the Act assigns to policymakers and the industry today. I'm only saying that we should not let today's obstacles obscure our responsibility as stewards of the long view. …