David Shemano wrote:
>From a bankruptcy lawyer's perspective, the concept of requiring the
Bells to license their lines to competitors has turned out to be pipedream.
The DSL industry has imploded over the past year. Several of the companies
that licensed the lines (Northpoint, Rhythms) have already filed for
bankruptcy. Covad Communications is probably only months away. The level of
companies below Covad/Northpoint/Rhythms are filing bankruptcies left and
right, which is in turn causing the companies up the food chain to suffer. (I
represent the Creditors' Committee for Zyan Communications, which had 25,000
customers at its peak). The problem is that without huge, and I mean huge,
economies of scale, DSL and other services are simply not profitable. A
provider needs hundreds of thousands of paying customers, if not millions, for
the structure to be profitable. Based upon current trends, the Bells will be
the only companies with the financial resources to offer DSL service. The
competition to the Bells will have to come mainly from the cable companies,
and eventually DirecTV/Echostar if and when the technology becomes feasible
and cost-effective.<
I agree. And this was entirely foreseeable (it's not a million miles from the
natural monopoly argument, after all).
I'm left wondering ... if Greene had kept AT&T as was in'82 (regulated wire
monopoly across local loops and long-distance), and the government had allowed
providers of other delivery technologies into phone markets, competition from
cable (the potential of which was already obvious), satellite
(IBM/Aetna/Hughes's SBS Ku-band satellite had already showed its technical
potential, if not any profitability in the moment - precisely because they
weren't allowed to compete at the level of wire backbone), and microwave (MCI
was on to this precisely because they weren't allowed to compete at the level
of wire backbone) could have taken care of the innovation-inducing aspect of
competition, without inviting nearly so many of the costs that attend
competition (eg duplication of delivery technology, consumer confusion
regarding long-distance calls, market-by-market litigation against RBOC local
monopolies and, er, bankruptcy proceedings).
Does that sound convincing at all?
Cheers,
Rob.
