ALEC 2004 Summit: Good Policies Equal Good Things for Consumers
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Presentation at ALEC's 2004 States & Nation Policy Summit by Joe Cosgrove, Jr., SBC Telecommunications, Inc., on developments in telecommunications policies.
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ALEC 2004 Summit: Good Policies Equal Good Things for Consumers
- 1. ALEC's 2004 States & Nation Policy Summit Good Policies Equal Good Things For Consumers Joe Cosgrove Jr. General Attorney & Asst. General Counsel SBC Telecommunications, Inc. © All Rights Reserved
- 4. Wireless exceeds landline 114.6 Million 96.2 Million
- 5. It’s a new world VoIP http://www.sbc.comhttp://www.sbc.com
- 6. Long Distance ThenThen • regulatedregulated monopolymonopoly • little choicelittle choice • expensiveexpensive NowNow • competitioncompetition • many choicesmany choices • lower priceslower prices • investmentinvestment • innovationinnovation • technologytechnology public policypublic policy changechange reducedreduced regulationregulation new marketnew market entrantsentrants
- 7. Wireless ThenThen • duopolyduopoly • expensiveexpensive • limitedlimited coveragecoverage • expensive,expensive, clunkyclunky phonesphones NowNow • competitioncompetition • many choicesmany choices • lower priceslower prices • massivemassive investmentinvestment • rapidrapid innovationinnovation • technologytechnology public policypublic policy changechange reducedreduced regulationregulation new marketnew market entrantsentrants
- 8. Local Voice Service ThenThen • regulatedregulated monopolymonopoly • nono consumerconsumer choicechoice • monthlymonthly phone rentalphone rental feesfees NowNow • competitioncompetition • many choicesmany choices • lower priceslower prices • investmentinvestment • innovationinnovation • technologytechnology public policypublic policy changechange reducedreduced regulationregulation new marketnew market entrantsentrants
- 9. Broadband ThenThen • higher priceshigher prices • limitedlimited availabilityavailability • limited speedslimited speeds • inconsistentinconsistent federal andfederal and state regulationstate regulation NowNow • lower priceslower prices • many choicesmany choices • widely availablewidely available • higher speedshigher speeds • investmentinvestment • innovationinnovation • technologytechnology public policypublic policy changechange reducedreduced regulationregulation new marketnew market entrantsentrants DSL $27 DSL $50
- 10. 23 local service companies 10 Internet service providers 6 cellular companies 3 cable companies Cushing, OK Population 8,371 For example
- 12. ALEC Telecommunications and Information Technology Task Force “minimal, competitively neutral state and federal regulation of all telecommunications providers”
- 13. Two Cheers For Telecom Regulators Making Way For VoIP, Cap Spending FCC Brightens Future of Broadband Telecom Turnaround an internet vote that has the potential to reshape the industry from the ground up
- 14. Good policies equal good things for consumers choice optionscompetition competition prices technology innovationinnovation lower ☺☺ ☺☺ © All Rights Reserved
Editor's Notes
- Devil’s Bargain A young lawyer met the Devil at a Bar Association convention. The Devil said, “Listen, if you give me your soul and the souls of everyone in your family, I will make you a full partner in your law firm.” The young lawyer said, “So … what’s the catch?” Oldest Profession A doctor, and engineer and a lawyer were discussing which of the three professions was the oldest. The doctor said on the fifth day of creation, God took a rib out of the side of Adam and made Eve. So God was a surgeon. The engineer said, “Yes but long before that, God created the world out of chaos. So obviously God was an engineer.” And the lawyer said, "Yeah, but who created the chaos?!”
- Today’s communications world bears little resemblance to the phone company my grandfather and grandmother, who was an operator when they met, worked for back in 1905 … If they could see broadband and broadband services, wireless phones that fit in a shirt pocket, and voice service over the Internet, they would not even recognize the lingo (packetized, WiFi, CLEC) or the communications world today.
- It really is a new world today … here’s something I (and I suspect others) never thought we would see: just about two years ago, the number of wireless customers passed the number of residential landline customers. Right now, there are about 18-and-a-half-million more wireless customers (114.6M wireless subscribers to 96.2 million residential landline customers) That’s amazing! Especially when you consider how relatively new wireless is compared to the century-old wireline business.
- The breakup of AT&T was a significant event, to be sure, but really, there’s been an equally dramatic steady and highly successful shift in communications policy for the past three decades … from less regulation to more customer choice. And this logical progression has been a great success for consumers … a great example of how good policy equals good things for consumers is in long distance.
- Up until the early 1980s there was really only one long distance company, “Ma Bell” … and it was a regulated monopoly. For many people, a long distance call was almost a luxury up until then … something you didn’t do all that often and hung up quick when you did because of the cost. But policy makers replaced regulation with competition … and dozens of new companies entered the long distance market, starting with MCI. And competition worked – prices dropped … consumers gained choices they’d never had before, like flat-rate plans that allow unlimited calling … and new technology like fiber optics started flowing into the market.
- Now, cell phones have a little bit different history, but there are some parallels. Wireless technology was technically ready to go years before it got to the market … but once the FCC freed up the spectrum, it really took off. Almost immediately, prices – even though they started out pretty high – fell quickly … new carriers came in and invested in new infrastructure … phones went from this (HOLD UP BAG PHONE), which probably cost $500 even “back in the day” when it was the sleekest, newest, most state of the art thing on the market, to this (HOLD UP A NEW CELL PHONE), which I got for (LESS THAN $50?) And this phone takes pictures, sends and receives text messages and can access the Internet. And all this happened for a very simple reason: because companies competed head to head and consumers decided who won. But here’s the key difference between the wireless market and the long distance market: policy makers learned from their success in letting competition drive the long distance market – lower prices … more choices … better services … new technology. So instead of imposing thousands of pages of regulations on this promising new cellular service, policy makers decided to trust consumers to regulate the marketplace … and it worked. And, looking back now, I think it’s easy to say that was a wise move, and importantly, it is consumers who benefited the most from that decision.
- The next great sea change in communications came in the mid-90s, with the opening of the local markets to competition. Until then, local Bell telephone companies were kept out of the long distance market and long distance companies were kept out of the local market. But policy makers again decided to replace a regulated monopoly with competition … and guess what? It worked again, and scores of new competitors entered the local marketplace with popular new service plans and steep discounts.
- You might think, “hey there’s a pattern emerging here” … and it fits for broadband, too! Broadband to me is fast access to the Internet. Broadband includes many services, from moving large amounts of data like bank transactions, to high-speed Internet service in your home. Broadband didn’t fit the old definition of telecom, the old monopoly regulations just didn’t fit. That’s why today, the FCC followed joined with several states and this organization and took a hands-off approach to broadband. And the result? Well, my company, SBC, today offers one of our most widely used broadband services, DSL, for $26.95 a month – much less than a box of Pro V1s. Now think about that for a minute. Just a couple of years ago, our and others’ DSL was about $50 a month, nearly twice what it is today. There are two simple reasons for this: The competition in broadband is extremely intense, and lowering our price gives us a better opportunity to compete. And second, because of that hands-off regulatory approach, we were able to quickly lower our prices to better compete. Believe it or not, that’s not always the case with all our services.
- WHERE WE ARE TODAY (DEMO INTRO) So, what have we talked about so far? First, that competition – not old regulations – has lowered prices and increased customer options in long distance, cellular, local and broadband. And when I talk about competition, understand that I mean virtually everywhere, not just in the big cities. In little Cushing, Oklahoma, population 8,371, there are 23 local service companies 10 Internet service providers, including one wireless ISP. 6 cellular companies 3 cable companies, and And you can imagine the kind of competition there is in big cities like San Francisco, Chicago or Dallas And second, we’ve seen a dramatic increase in the number of options customers have … we’ve seen a dramatic increase in the number of competitors. But one benefit of competition we don’t talk about enough, though, is how it stimulates new technology. We all know that you cannot regulate innovation. It is competition that causes new technologies to be brought to consumers more quickly and more affordably. But instead of just talking about it, I’d like to show you what I mean. (DO THE DEMO)
- BACK TO JOE FOR CONCLUSION I think it’s pretty clear that this is no longer my granddad’s communications world. Back in his day, Southwestern Bell got just about 100 percent of the communications dollars spent in our territory, a true (but lawful) monopoly. Today, with all the new technologies and XX companies in the market, our share of the dollars spent in our territory on communications now stands at 27 percent. And you can see that there’s great potential for the future … VoIP is just the tip of the iceberg – just imagine what the next wave of services might bring. This is an important policy issue, and as usual ALEC is leading the way.
- This summer in Seattle, the Telecom and Information Technology Task Force unanimously approved a resolution calling for, and I quote, “minimal, competitively neutral state and federal regulation of all telecommunications providers …” I understand that there is a new ALEC State Factor policy paper about to be released that will talk a lot more about this issue and the position this organization has taken.
- And just a few weeks ago, the FCC joined with ALECand ruled that new Internet communications services like VoIP, which you just saw a demonstration of, are a new kind of interstate service, one that does not require close oversight at the state level. This ruling played a big role in our decision to speed up our investment to bring new technologies and services like VoIP to the market.
- That’s very positive … and very important. It proves a key point – that good policies equal good things for consumers. But you – as the lawmakers – have the ability and the opportunity to help ensure that the progress toward less regulation and greater consumer choice continues … to take the next logical step in communications policy. And as we have witnessed over the past quarter-century, good policies equal good things for consumers.