Letters to the Editor
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‘Puzzling Telecom Merger System Needs Overhaul’
Your business article on the AT&T merger missed one key point about how the Bell telephone monopolies can frustrate competition and thereby continue to hike rates on consumers [Business, “Puzzling Telecom Merger System Needs Overhaul,” October 16, 2006].
Today, incumbent telephone companies still control over 85% of the residential and small business marketplace.
New competitors — like the local cable companies — are bringing to the marketplace a new service called VoIP (Voice over Internet Protocol), which offers more features and is made available at lower prices.
Facilitating competition in the telephone industry will ensure that VoIP services can compete with the old telephone monopolies on a level playing field.
Such competition could save consumers in New York 6.6 billion dollars over the next five years, according to a recent economic study I authored.
To make VoIP competition work, traditional telephone companies must “interconnect” their networks to their competitors, which allows calls to be “handed off” between one provider and another. But because VoIP providers transmit calls by “Internet Protocol,” the calls are classified differently under the law and, according to some traditional telephone companies, don’t have the same “interconnection” rights as do, say, cell phones.
In Congress, pending telecom bills protect interconnection rights for cable phone competitors and would secure the foundation for this vital form of competition without a new round of regulations and litigation.
Let’s hope that, as lawmakers return to Washington after the election, this doesn’t get lost in the legislative shuffle.
MICHAEL PELCOVITS
Economist
Microeconomic Consulting and Strategic Research Associates, Inc.
Washington, D.C.
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