Telecom Mergers Get Friendly Reception on Capital Hill

Thursday, March 03, 2005 :: infoZine Staff :: page views
Telecom Mergers Get Friendly Reception on Capitol Hill
By Kathryn Fiegen -
http://www.infozine.com/news/stories/op/storiesView/sid/6242/

With the boom of recent telecommunications mergers still creating waves in the marketplace, lawmakers told telecom executives Wednesday they generally approve of the deals - but on the condition that the outcome remains consumer-friendly.

Washington, D.C. - Scripps Howard Foundation Wire - The House Committee on Energy and Commerce hosted a panel of chief executive officers from merging companies Verizon and MCI, AT&T and SBC Communications, and Sprint and Nextel.

Rep. Fred Upton, R-Mich., said these mergers will help the country move up from its current international position of No. 11 in the availability and use of broadband Internet technology.

"These mergers are logical, but integral," he said. "I consider these mergers a tuneup ... to compete globally."

The corporate executives agreed the mergers would open doors for technology improvements. All spoke of benefits, such as additional towers and fiber optics, their combined companies would bring to customers.

Committee members pointed to possible downsides, such as less competition leading to higher costs.

"We have the emergence of a duopoly," said Rep. Heather Wilson, R-N.M. "I do have doubts that this will benefit the American economy."

She was referring to the Verizon-MCI and AT&T-SBC mergers.

Rep. Anna Eshoo, D-Calif., agreed.

"We are left with two large competitors that dominate," she said. "I just ask that they treat new entrants and competitors fairly."

Because of the plethora of media employed in most households, from cable modems to traditional telephone lines to wireless service, Edward Whitacre Jr., of SBC, said it would be nearly impossible for consumers to have fewer options.

"It is safe to say there are fewer companies, but there is more competition," he said.

But none of the executives was willing to promise that prices would remain at current levels.

The executives and the committee members all said they recognize the need to update the Telecommunications Act of 1996, which includes little or nothing on wireless service or the Internet.

"Consumers will benefit from a realistic assessment of what telecommunications means in the 21st century," said Rep. John Dingell, D-Mich.

Rep. Eliot Engel, D-N.Y., said the bottom line is that telecommunications is evolving and Congress must keep up.

"I don't fear change, but we have to think what is best for the consumer," he said. "We think that when the genie is out of the bottle, we need to try and push it back in and yearn for the good old days."

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TIA | PulseOnline August 2001, Also in this issue...: Tom Carter ...
... know full well that they would not be in business right now had the Federal
Communications Commission (FCC) not handed down the Carterfone decision of 1968 ...
IT ALL STARTED HERE:

==================================

Tom Carter Inducted into RCR’s Wireless Hall of Fame

Thomas "Tom" F. Carter, inventor of the "Carterfone" and the essential founder of the competitive telephone equipment market, was officially named to the Wireless Hall of Fame in May. The hall of fame was created to recognize those people who have made significant contributions to the advancement of the wireless telecommunications industry and was founded by RCR Wireless News.

Some may remember a time when the American Telephone and Telegraph (AT&T) Company had a monopoly on the manufacture of all telephone equipment installed on a customer's premises. Many in the industry know full well that they would not be in business right now had the Federal Communications Commission (FCC) not handed down the Carterfone decision of 1968, allowing non-telephone company devices that are "privately beneficial" and not "publicly harmful" to be connected to the public switched telephone network (PSTN), commencing the deregulation of the telecom equipment market.

Tom Carter, a determined Texas businessman, is the reason for that decision. He fought for and won the rights for end users to choose and install privately owned telephone equipment.

A Little History
In the 1940s, Carter was selling and installing two-way radios, primarily for the petroleum industry. While doing this, he discovered a real need for a device that would enable a well site (often off-shore) worker on radio to speak directly to executives via telephone in the corporate office, thereby eliminating the mistakes a radio relay operator might make. And so, he designed a coupler for radio communications that would attach to AT&T’s network.

Over the next two decades, Carter built a business out of selling these "Carterfones," until AT&T caught wind of his invention and forced him to stop.

Carterfone: A device for connecting a two-way mobile radio system to the telephone network, invented by Thomas Carter. It was electrically connected to the base station of the mobile radio system. Its electrical parts were encased in bakelite. When someone on the radio wanted to speak on a “landline” (the phone system) the base station operator would dial the number on a separate phone then place the handset on the Carterfone device. The handset was acoustically, not electrically, connected to the phone system.

Source: Newton’s Telecom Dictionary; 16th edition.

For years, the Bell companies maintained that the public could not hook its own equipment to the public network due to the fact that these devices could cause irreparable network harm. Citing factors such as excessive signal power, hazardous voltage, improper network controlling and line imbalance, the Bells fought to keep entrepreneurs like Carter from selling their products to end users.

Carter reacted by filing an antitrust suit against the telephone giant in 1965. His associates recall the financial hits that his business took. He sold his ranch, converted his assets to capital and saw his business shrink significantly, as he fought to use the device he had developed.

Fortunately for the industry, his perseverance paid off.

An Industry is Born
In 1968, the FCC issued the historic Carterfone decision, forcing Ma Bell to relax her hold on the equipment market, and opening the doors for independent vendors to begin developing and selling telephone equipment to use with the public network. Implementing this decision led ultimately to the FCC’s Part 68 registration program for equipment to be interconnected to the public network.

After winning the decision, Carter went on to found the North American Telephone Association (NATA) in 1970 to "protect and expand" the competitive market he had established. NATA was the predecessor of the MultiMedia Telecommunications Association (MMTA), which was fully integrated into TIA in January 2001. In 1975, Carter moved to Gun Barrel, Texas, with his wife and ran a small radio business. He died in 1991, having never amassed a fortune for himself.

George Benson, president and chief executive officer of Wisconsin Wireless Communications Corp., served with Tom Carter on the NATA board since its inception, and remains a current member of the TIA Global Enterprise Market Development Council. According to Benson, "Because of Carter, businesses were built, millions of people cashed in and major advances in technology were made. I don’t think that he ever really meant to create an industry. He just fought to protect and expand the competitive market. And lucky for the rest of us, he won.”

In 1978, NATA created an award to recognize outstanding service in the public interest in the field of telecommunications. The award was given to and named in honor of Tom F. Carter, in recognition of the great role he played as a true pioneer of the industry.

This award has long been coveted as the highest honor the industry leadership confers upon one of its peers. Past recipients of the Tom F. Carter Award include: Ronney Harlow, H. M. Eaton, Ed Spievack, Richard Long, Ed Brody, Stanley Blau, John Hinkle, William Obermayer, John Cosgrove, Tom Kelly, Bob Chrostowski, Al Kramer, Terry Bryan, Randy Smith, Dave Lear, George Benson, Paul Wexler, Ron Charnock and Bill Nicewanger (joint recipients of the 1997 award), M.J. Emerson and Fred Yentz.

For more information, please contact Maureen Berestecky at (703) 907-7475 or mbereste@tia.eia.org.
http://pulse.tiaonline.org/article.cfm?id=546