Telecom Act Five Years Later: Success or Failure?
The intent of the Act according to the original language, was stated as such: "To promote competition and reduce regulation in order to secure lower prices and higher quality services for American tele-communications consumers and encourage the rapid deployment of new telecommunications technolo-gies."
Doubts as to the effectiveness of these objectives, however, have been raised by liberals and conserva-tives alike, and both suggest that in many ways the Act is not working.
Representing the latter of these two factions is the new House of Representatives' Energy and Com-merce Committee chairman, Rep. W.J. "Billy" Tauzin, (R-La.).
In an interview conducted shortly after taking charge of the committee, Tauzin said, "The most impor-tant motivation I have in all of the policy decisions we're going to try to make is to make an open, free, competitive communications marketplace." This statement seems to agree with the Act's attitude of competition but disagree its posture of regulation.
In that same interview, Tauzin elaborated: "That means keeping government out of the business of regulating the Internet, particularly as we go broadband with services that will include not just regular data, but video and voice as well."
Finally dispelling any doubts as to where he stands, the new chairman said, "If the Bells, AT&T, any-one else comes to me with a proposal that moves in the direction of more regulation instead of more open markets, they will not find a friend here," Tauzin said.
Politics and special interests aside, is the Act seemingly doomed to dismantling because it's not working properly? Many seem to think so.
In a recent speech, Michael Armstrong, chief executive of AT&T, said, "The act was intended to pry open the local phone market," but five years after its inception, the four Big Bell companies SBC Communications, BellSouth, Qwest Communications International and Verizon Communications maintain effective monopolies that "still have a tight grip on Boardwalk, and they're closing in on Park Place."
Yet the effects of the Act are different for long distance, broadband and cable companies, for example, than for alarm companies.
From a security industry standpoint, even the intent of the Act can be questioned: "The Telecom Act was structured to allow the Bells to become a dominant force in the world of monitoring. It had nothing to do with opening of competition as competition was already open," says Ron Cain, president, Cain Security Systems, Inc., Alexandria, Va.
Yet, whatever its intent, how has the Telecommunications Act affected the security industry?
Telecom Act Acting on Security Industry?
"As of this date it has had no significant effect except to fuel the acquisition frenzy. Prices have fallen because of mass marketers efforts. The only Bell in the business has now exited without significant impact," Cain says.
This sentiment is echoed by others in the industry.
"To this point there has been little effect on the security industry overall," says Bob Shoremount, vice president, APS Corporation, Merrick, N.Y. "Some companies have been affected in areas where acqui-sitions took place before the five year waiting period, but the overall effect has been neutral. Most alarm companies develop a niche that works for them that they use to their advantage in selling their serv-ices."
"The Telecom Act has had generally neutral impact on the Security Industry so far," says Bart A. Did-den, president, NBFAA. The Regional Bell Operating Companies (RBOC) have been restricted in their ability to offer alarm services but market forces may have provided a similar limitation anyway. De-regulation of local carriers has added complexity to the introduction of DSL lines making it more diffi-cult to ensure that all providers offer services in a way that does not impact alarm transmissions over phone lines. For the most part consumers and businesses have yet to realize the predicted local compe-tition," Didden says.
Some, however, feel that the Act has had a positive impact on the security industry.
"I feel that, from the industry's point of view, the Telecom Act has been a success ? albeit a qualified one," says Cecil E. Hogan, president, Security Consultants, Inc., Memphis, Tenn., and sec-retary, National Burglar and Fire Alarm Association (NBFAA). "Not only is competition beginning to open up nearly everywhere," Hogan says, "but technology is providing alternatives today that were not generally available in 1996. The Bells have size, name recognition, and deep pockets, but so do all the national companies that we're used to competing with. We've learned that any company can compete by providing quality installations and service. Today we have Internet monitoring capability, affordable & reliable two-way radio, and competing telco providers. Most dealers today have also diversified much more than they were in '96. Many now install and service telephone systems, satellite dishes, home automation systems, you name it. The entrepreneurs of this industry are survivors, and they will find a way to compete."
New Administration, New Expectations?What about the effects of the baton pass from one administration to the next?
"I don't expect the new administration to want to make any major changes," Shoremount says.
This opinion, however, represents the mintority.
"New leadership at the Federal Communications Commission (FCC) and Department of Justice will bring new more business-friendly standards for implementing the Act. Focus will continue to be on ef-forts to increase competition locally and the FCC will have its hands full on efforts to implement En-hanced 911, Low Power FM Radio Service, high definition TV along with steps to increase the amount of spectrum available for cellular phones and other wireless applications," Didden says.
"The talk will probably be of greater deregulation but the impact will continue to be selective and favor those interests that invest the time and money in advocating changes. So far there seems to be a reluc-tance to reopen the Act because it took so long to reach a consensus on the provisions the last time. In part because all members running for reelection will need campaign contributions to prepare for 2002. I think we are in for a year or so of hearings seeking a new consensus," Didden says.
"Now that we have a new Administration, the Act will no doubt be scrutinized and perhaps changed or scrapped altogether. That is not necessarily a bad thing, but we must stay involved and be prepared once again to make our voices heard. The lessons we learned in getting our provisions into the Act in '96 are today more important to us than the Act itself. We know now how to stand up for ourselves on a Na-tional level. We've seen what a true grass-roots presence can do, and our elected representatives re-member us, too. We were not given much of a chance in 1994 when debate began . Big Money was in-volved, and it seemed we were going to get lost in the shuffle. In the end, of all the industries affected by the bill, we were only one to get "special provisions" included," Hogan says.
"With a new Administration comes new opportunity and new dangers. It is imperative that we stay in-volved and aware of any proposed legislation or regulatory changes that will impact us as small busi-nesses and entrepreneurs," Hogan says.
"With respect to your question about the effect of the new administration or specifically the House En-ergy and Commerce Committee, I think that, if we are vigilant we can be effective in the lobby func-tion. We were often called 'the most effective grass roots lobby' that had ever shown up on Capital Hill the last time around," Cain says.
What Needs to Happen Now?"This is why we must continue to have strong national representation for all dealers. A united grass roots voice will protect our livelihoods from unfair or illegal competition. The CSAA represents U.L. Listed dealers, the SIA represents manufacturers and distributors, and the NBFAA represents individual dealers, both large and small. Everyone in this industry needs to pick the one that represents their place in the industry and support it wholeheartedly. It may be all that stands between you and a law you can't live with," Hogan says.
"From my point of view as an independent dealer, I believe the effort the industry put forth five years ago was well worth the time it bought us. Could we have survived without our provisions in the Act? Possibly - but I for one am very glad we didn't have to fight that fight for the last five years," Hogan says.
"As far as the present Telecom Act is concerned, I believe it has served us well in buying us the time we needed. If there is talk of "freeing the Bells" from the provisions of the Act, we must be a part of the discussion and be prepared to take another stand, if necessary," Hogan says.