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Jewish World Review Nov. 20, 2001 / 5 Kislev, 5762

Joseph Perkins

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Consumer Reports

Telecommunications reform benefited public -- "WHY did the telecommunications bill get passed at midnight -- a hidden bill at midnight?"

So asked Oliver Stone at a recent forum presented by HBO Films, all-too-pretentiously titled "Making Films That Matter: The Role of Filmmaking in the National Debate."

The writer, director and conspiracy theorist suggested that there was some nefarious motive driving enactment of the 1996 bill, one of the only overhauls of the nation's telecommunications laws in more than six decades. He implied that lawmakers ceded control of the nation's telecommunications industry, which accounts for one-sixth of annual gross domestic product, to a handful of mega-corporations (including AOL Time Warner and News Corp.); and that the unsuspecting American public -- telephone customers, cable subscribers, Internet users, et al -- now finds itself subject to the tender mercies of a telecommunications oligopoly.

But the question that non-conspiracy theorists ought to ask, five years after passage of the Telecommunications Act, is whether American consumers are better or worse off than before. Do they have more or fewer choices for telecommunications, including voice, video and data? Are they paying less or more for telephone, cable and Internet?

San Diego, the nation's seventh-largest city, provides a good case study. Five years ago, the city's telephone customers had but one local service provider: Pacific Bell. The city's cable customers were divided between two non-competing providers: Cox Communications and Southwestern (since acquired by Time Warner). The city's Internet subscribers had no high-speed service providers competing for their business.

Deregulation of telecommunications changed all that, said Dan Novak, vice president of Cox San Diego. It broke down the artificial barriers between, say, telephone companies and cable companies, allowing them to compete on each other's turf.

And San Diego residents have benefited greatly.

Indeed, Cox has offered local phone service over its network of fiber-optic cable lines for the past three years. It has wooed nearly 100,000 San Diego customers from PacBell, the formerly unchallenged local phone monopoly, with "the average customer saving 30 percent to 40 percent," according to Novak.

Unfortunately, Cox does not serve all of San Diego. So phone customers outside the local cable company's service area must still rely on PacBell for landlines.

However, an increasing number of San Diego residents are relying on wireless phone service as an alternative to landlines, despite the fact that the average cost of cell phone service in San Diego increased 2.8 percent last year, to $43.65 per month. If the cost of wireless service starts to decline in San Diego, as it has for most of the nation's largest metropolitan communities (where monthly charges fell an average of 7 percent last year), PacBell may find itself surrendering even more market share to rivals.

On another front, the local phone company is losing the battle to bring high-speed Internet connections to San Diego homes. Cox Cable provides broadband service to more than 100,000 San Diego customers; Time Warner to about a third as many. Between them, the local cable companies far outpace PacBell.

That situation is a microcosm of what is happening nationally. The regional Bells enjoyed a decided size advantage over the cable companies. Their wires were already in 99 percent of American homes. Yet, the cable companies beat them to the draw in broadband. And the result is that twice as many Americans get their high-speed Internet connections from cable modems than from the telephone industry's direct subscriber lines (otherwise known as DSL).

Meanwhile, the cable companies are not without their own trials. Even as they take on the phone companies in the markets for voice and data, they find their own markets under challenge by satellite television companies.

In San Diego, Cox and Time Warner used to enjoy a decided price advantage over such rivals as DirecTV and Dish Network, what with the cost of buying and installing a dish, as well as the cost of monthly satellite service.

But DirecTV has driven down the cost of buying and installing a dish -- to $99, according to a recent advertisement -- where it is no longer an issue for most of San Diego's multi-channel television subscribers.

And with monthly rates that are considerably lower than cable for comparable service -- like Dish Network's $9 basic plan for 100 channels -- satellite TV providers are putting competitive pressure on local cable providers to keep their prices down.

Competition in local phone service, high-speed Internet service, multi-channel television service and other telecommunications markets hardly existed prior to 1996.

That's why, notwithstanding the mad ravings of Oliver Stone and other recalcitrant critics of the five-year-old Telecommunication Act, the law has been an overall boon to the nation's consumers.

JWR contributor Joseph Perkins is a San Diego Union-Tribune columnist and television commentator. Send your comments to him by clicking here.


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© 2001, NEA