Taking aim at the FCC

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Nevertheless, despite the years of legal uncertainty, the act already has prompted the beginnings of dramatic shifts in the telecommunications market.

On the local level, scores of competing phone companies have sprung up to take advantage of new rules forcing the Bells to lease pieces of their network at wholesale rates to competitors.

According to the FCC, these competing local carriers--which range from tiny start-ups to long distance giants such as AT&T and MCI WorldCom--have installed or leased close to 5.1 million access lines across the country. Revenue numbers for the industry as a whole near $5.7 billion for 1998 alone.

While this is still just a tiny fraction of the $100 billion local phone market, the companies--like ICG Communications, Covad Communications, and others--have invested heavily in new infrastructure, raising more than $20 billion altogether from Wall Street in the last three years.

These companies have made substantial inroads into the high-profit business market. But they have left the consumer market, where profit margins are often thin or nonexistent, almost untouched.

Enter the "digital divide"
Consumer groups call this the "digital divide," saying that the Telecommunications Act brought price cuts only for corporate customers and other high-volume telecommunications users, while ordinary users subsidize massive infrastructure investments in data and other high-end services.

A study released early this month by the Consumers Union and the Consumers Federation of America found that local rates had remained at 1996 levels and that only a handful of residential consumers had a choice for their local phone service. Meanwhile, cable rates had risen 21 percent, and in-state long distance calls had risen by an average of 10 percent.

"Policymakers should quit pretending competition is around the bend and instead do something to block inappropriate price hikes," said Gene Kimmelman, co-director of the Consumers Union Washington office, and a co-author of the study.

The road ahead
The next few months will prove to be some of the most critical in the Telecommunication Act's history.

Buoyed by the recent Supreme Court rulings, the FCC is scheduled to make new rules governing the Baby Bells' high-speed data business and approve or block mergers among four of the biggest local phone companies.

But the FCC will constantly have the threat of the congressional hearings in the background as it reviews these merger issues, marring its new freedom granted by the Supreme Court.

Although some of the early critics of the FCC had advocated reopening the act this year to speed competition for consumers, most legislators say they have more modest goals now.

"While the act is not perfect, we have seen some expansion of services, and I think more is possible," Sen. Conrad Burns (R-Montana) said in a recent statement to the press. "It will serve no one's interest to go through the old debates again. It will only deflect blame away from the FCC's shoddy implementation of the act."

Burns and others do say they plan to expand and clarify the law with new legislation. He plans to introduce a bill providing new incentives for companies to roll out high-speed data networks in rural areas. Dewine will proceed with his bill on telecommunications mergers, and McCain will be joined by Reps. Billy Tauzin (R-Louisiana) and John Dingell (D-Michigan) in possible attempts to scale back the FCC's rulemaking power.

"We did not anticipate the FCC misinterpreting or ignoring congressional intent," former GOP representative Fields said. "I think what you're going to see this session is Congress looking at the Federal Communications Commission as an agency that is not necessarily in sync with what is happening in telecommunications."  

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