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Convergence and Fear Driving Telecom

October 24, 2006 on 9:32 pm | In IdBlog, Spin | Comments Off

In their October 12 edition, the Economist printed a series of articles that explained a lot about big telco’s push to overthrow the common carriage rules that have been in place for decades.

The lead piece is called ‘Your Television is Ringing’ and it documents the shift in telecommunications that is behind the current wave of mergers. Basically, the Economist explains, everything’s gone to IP. Voice, data and video are all using the Internet Protocol now. It’s one big network — a phenomenon telco execs call convergence.

That open field has frightened old fixed-wire phone companies — which have recently been thrown into direct competition with upstart cable and wireless outfits — into a wave of mergers.

Ironically, the switch to IP should mean substantial savings for telcos. British Telecom, the Economist reports, expects operating expenses to fall by 30% once the transition to IP is complete.

Yet, here in the United States, we have telecoms like AT&T lobbying the FCC to toss aside longstanding common carriage rules to implement tiered service plans. The reason they give is economic hardship (telcos lost a bundle on premature installation of fiber optics in the 90s).

A truly free-market administration would dismiss this special pleading without debate. Unfortunately, this administration has a very narrow view of free markets and has stacked the Federal Communications Commission with former telco lobbyists who take this kind of request from their future employers very seriously.

Without a legislative directive from Congress mandating network neutrality, it is likely that the FCC will acquiesce to telco’s unreasonable demand.

The midterm election is in two weeks. The principle of network neutrality is just one reason among many to vote this year. Make sure you do.