[IP] More WSJ Fiction

[Dave Farber <dave@farber.net>]

Title: approve:tippie   More WSJ Fiction

------ Forwarded Message
From: Rob Frieden <rmf5@psu.edu>
Date: Sat, 15 Feb 2003 17:03:13 -0500
To: dave@farber.net
Subject: More WSJ Fiction

Hello All:

        Bless their hearts: the editorial writers of the Wall Street Journal just cannot seem to get their  facts straight, of for that matter, let the facts get in the way of their politics.  A few weeks ago, the Journal editorialized that government refusal to support monopolization of the direct broadcast satellite business would ruin the prospects for satellite delivered Internet access to rural areas. Apparently more transponder capacity and monopoly pricing would eliminate the technological disadvantages in satellite point-to-multipoint data services.  

        In a Thursday Feb. 13the editorial the Journal demonized FCC Commissioner Martin and "interventionist" state public utility commissioners for endorsing a slower approach to deregulating the RBOCs.  Again the Journal never got around to fact checking. It sees a migration from wired to wireless services as "accelerated cherry-picking of profitable Bell customers who subsidize universal service for the poor," despite the fact that cellular subscribers make universal service contributions and many wireless consumers subscribe to a Bell affiliate.  So let me get this straight: a satellite monopoly is good for rural service, but migration to competitive, wireless alternatives is bad, or is universal service bad except when it justifies a merger?

        The Journal also stated that "under the FCC's sharing rules, any profits from investment in DSL are socialized while any losses are borne by the Bells themselves."  First the RBOCs reported billions in profits for 2002.  This week's edition of Business Week reported SBC's 4th quarter 2002 margin at a juicy 21%.  Second, rate payers underwrote the Bell's embedded copper investment by paying fully compensatory, regulator approved rates replete with subsidies. Third, the Supreme Court upheld the Telecommunications Act of 1996 prescription of forward looking costs--admittedly below an arm's length, market drive rate, but not confiscatory.  Forth, if DSL and unbundled network elements are so low one would have expected the RBOCs to make some "easy money" by leasing UNE-Ps in markets outside their home territories. Fifth, the RBOCs themselves lobbied for an a quid pro quo in the '96 Act: loss of local exchange market share in exchange for new market opportunities such as inter-LATA long distance.  The fact that long distance has become a low margin commodity business should not eliminate the duty of the Bells to comply with the deal they struck.

        The stakes are too high to let fiction replace reality.

        


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