Time to democratize the telecom marketplace

But if there was ever some low lying fruit in this debate for either party, it would be in overturning a recent ruling on telecommunications by a panel of a federal appeals court that will help only four monopoly telephone companies at the expense of tens of millions of consumers and hundreds of thousands of workers.

Unless overturned, the decision could result in a regressive price hike for 19 million consumers who now benefit from telecom competition in their local communities and in the decimation of an entire competitive industry made up mostly of small businesses. Indeed, the ruling by the US Court of Appeals for the D.C. Circuit in favor of telecom consolidation may make last summer's media-consolidation debacle seem mild by comparison.

At issue are regulations that flow from the 1996 Telecommunications Act -- a bipartisan law which requires that telecom competitors get access, at reasonable wholesale rates, to the local telephone networks. This market-access law has, according to two studies released last week, resulted in more than $15 billion in savings for consumers and small businesses, the creation of 150,000 jobs, and more than $300 billion in investments in new telecom networks.

Since the market-access law was enacted, opening the doors for new telecom companies and more digital content on the information superhighway, the digital divide has narrowed considerably.

Indeed, this market-access law, passed nearly unanimously by Congress, recognized two unalterable truths about the telecom industry: first, that the massive local telephone facilities were financed by the taxpayers, nurtured during the course of a century with government subsidies, and literally gifted by the federal government to the then seven (now four) local telephone monopolies.

Second, the law recognized that because of this history, there would never be a competitive free market in this industry without such market-access requirements.

Indeed, there is such a compelling need to unclog the monopoly bottlenecks that this debate has been joined by the most unusual coalition of political bedfellows. A major telecom union -- the International Brotherhood for Electrical Workers -- has lined up with the major consumer organizations, the American Farm Bureau, the leading seniors' organizations such as the AARP, and a range of conservative advocacy groups to ensure that local telecom markets are opened to competition.

The campaign to end the market-access law is being led by Federal Communications Commission Chairman Michael Powell, who just months ago led a similar, and largely discredited campaign to consolidate media ownership. The agenda to kill telecom competition is likewise anticonsumer.

The Bell monopolies and their supporters are arguing that competition laws are somehow unfair subsidies for their competitors that will end up bankrupting the monopolies and thereby creating massive job loss.

Quite apart from the fact that the Bell monopolies owe their very existence to one of the largest government subsidies in our history, these arguments seem hollow. First, every independent audit has proven that the Bells profit when they lease their lines to competitors. Second, the Bells' overall profitability rates continue -- competition notwithstanding -- to be among the highest of any Fortune 500 companies. Indeed, Bells seemed to have little trouble in instantly producing a cache of $41 billion to purchase AT&T wireless -- the only major unaffiliated wireless company.

The Bells insist that further deregulating the telephone monopolies and ending the newborn competition in the local telecom industry will magically stimulate economic growth and job creation. The US Supreme Court, the Federal Communications Commission, the US Congress and most state governments have repeatedly rejected the logic of the argument.

But today, a single activist federal appeals court panel, acting on its own, has seemingly bought the argument and struck down regulations implementing the law and the many social benefits that accompany it. And, as many voices across the political spectrum have pointed out, unless overturned by the US Supreme Court, it will result in job loss and a depression in the telecom sector.

American populism in the 20th century was built on ending the abuse of monopolies in the steel, oil, and railroad industries and on discarding socially exclusionary practices of many sorts. While perhaps on a less dramatic scale, telecom competition today stands at these very same crossroads. And now, both parties should again call on the nation's highest court to again reinstate the bipartisan congressional mandate to break down the exclusionary walls of monopoly power in the local telecom industry that is the lifeblood of the critical information economy.

The Rev. Jesse Jackson is founder and president of Operation Push.