Wednesday, October 26, 2005

EATEL, the FCC, and You

The Baton Rouge business Report treats us to one of those true rarities: an unflinching, inside assessment of a competitive field. In "EATEL's wild ride" neither the author nor the company's president he interviews bothers to evade the difficulties EATEL faces or the ultimate source of those difficulties. Soft-pedaling such issues is what makes too much business writing into a form of puffery. Steve Clark is to be congratulated for avoiding those pitfalls.

The bottom line is that EATEL has lost more than half its customers by losing Baton Rouge and has laid off more than 20% of its workforce. This is a direct result of an FCC ruling that removes regulatory controls originally intended to introduce some competition into the monopoly wireline telephone market. EATEL was an aggressive competitor, undercutting BellSouth by as much as 20% and snatching many BellSouth customers. But EATEL is fighting back. From the story:
The silver lining is that EATEL ... is deploying a $30 million fiber optics network for television and high-speed Internet access that EATEL believes will prove is a potent weapon against newcomer Cox on EATEL's home turf in Ascension and Livingston...

Meanwhile, some experts say last year's FCC ruling--making it impossible for small telecomm companies like EATEL to have a chance against giant phone companies like BellSouth--is, in general, a step backwards for facilitating competition in the nationwide telecommunications sector.
The kicker is that this wasn't necessary. It was due to a decision by the Bush administration:
A series of FCC rulings upholding the Bell companies' obligation to lease lines to competitors at cost was reversed by a pair of decisions from a Washington D.C. circuit court. The Bush administration elected not to appeal the case to the Supreme Court, a move regional Bell companies such as BellSouth applauded.

"Had they appealed it, I think most everyone expects the district court decision would have been reversed, and the FCC's pro-competitive policies would have been permitted to continue," Gillan says. "Instead, by basically stopping the judicial review process at a point where the [Bells] had a win, they locked in this bad court decision."

The DC circuit is the nation's most pro-corporate bench. The failure to defend the executive branch's own regulatory decisions cost EATEL much of its customer base--and cost you a lot of money.

But, as EATEL clearly understands, the solution is to own your own advanced, fiber-based infrastructure. That, and that alone, can secure your competitive future. That makes two places in Louisiana that get it: Lafayette and Gonzales.

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