WSJ(12/17) Editorial: Telecom Meltdown, The Sequel
16 Dec 20:40
The cycle time between bad policy decisions and their impact in the
marketplace keeps getting shorter and shorter. Last week, EchoStar and Hughes
confessed defeat in their satellite merger attempt, foiled by regulators. Hours
later, Hughes announced for the benefit of its stock price that it wouldn't be
going ahead with residential broadband rollout after all.
That was the word from Jack Shaw, the company's CEO, in an interview with one
of our reporters. "No longer willing to make the risky investments" was how the
Journal's Andy Pasztor phrased it. Hooking up with Echostar was supposed to
give the combined company a potential subscriber base to make a satellite
broadband option for regular folks a money-making proposition. But now that the
merger is off? Fuggedaboutit.
These comments were aimed at investors. Any tweak to the FCC's Michael Powell
and the Justice Department was purely coincidental. Which ought to have Mr.
Powell and his trustbuster friends rethinking their regulatory instincts all
the more. Maybe even rethinking whether their Washington reference points
(i.e., the clamor of a few Senators and loose-cannon state attorneys general)
are such a good guide to policy after all.
Rural viewers were supposed to be winners from the decision, since vetoing
the deal would leave them with two weak, money-losing satellite providers to
choose from rather than one strong one. Instead, Washington may have just
ensured that rural America never gets access to broadband.
The decision probably also denotes the high-water mark of satellite's
challenge to local cable monopolists everywhere. Cable operators have been
laying on two-way interactivity so they can bring customers high-speed Internet
access and video on demand. That's in addition to the 200-channel feast of
regular broadcast signals. Satellite is destined to remain a niche business
unless it can match those offerings, especially the interactive ones, which
seems highly unlikely now.
The reasoning behind Mr. Powell's decision was so weak that it's hardly worth
going over. How rural viewers came to be accorded a "right" to competing
satellite providers superior to the right of satellite company shareholders to
dispose of their assets as they see fit was never explained. More to the point,
everyone now realizes that the telecom disaster was a product of Washington's
attempts to decree winners and losers in technological competition. The
question now is whether any learning goes on inside these agencies.
A matter of much prayer in tech circles is a series of decisions coming up
before Mr. Powell that will determine whether the Baby Bells are allowed to
adapt and survive -- or whether, like satellite TV, they will be held in place
by politicians and regulators bound by a blinkered and static understanding of
the world that's happening all around them.
Specifically, Mr. Powell will have a chance to eliminate the doofus
regulatory distinction between local and long distance that makes little sense
to users of e-mail, wireless and voice-over-Internet; also he'll decide whether
the Bells will have to keep subsidizing politically spawned competitors to
nibble away at their shrinking local dialing business and their stillborn
broadband businesses.
The Bells -- Verizon, Qwest, SBC and BellSouth -- once looked like the
least-beaten-up winners of the telecom wars. Rumors of their survival may have
been premature. This year local dialing shrank for the first time ever as more
person-to-person communication went to wireless, e-mail and instant chat. In
Asia, a voice-enabled Internet is now stealing traffic from traditional phone
carriers. Soon it will happen here.
These are wonderful signs of technological ferment, and the more the merrier.
But unless Washington wants to be left picking up the pieces of a second
telecom meltdown, the Bells should be allowed their best chance to prosper in
the new world too.
(END) Dow Jones Newswires
12-16-02 2040ET |
