Royce J. Holland: Proof that government can, in fact, work

Thursday, March 21, 1996 | 11:59 a.m.

WITH a presidential election on the horizon, conventional wisdom in many quarters has coalesced around the premise that our system of government is broken, that the legislative and executive branches are incapable of working together, and that no good ever comes from Washington.

However accurate that view may be for the rest of the economy, it certainly doesn't apply in the red-hot area of telecommunications, which accounts for some 17 percent of the gross national product. One need look no further than the Telecommunications Act of 1996, recently signed into law by President Clinton.

Here is a statute that recognizes the enormous potential of new technologies, promotes free enterprise, supports new industry, empowers the private sector, and lays the foundation for an improved national information infrastructure, all without a penny's cost to the taxpayer. And experience has demonstrated that growth in telecommunications competition and infrastructure spurs activity in other large sections of the economy.

The Telecommunications Act of 1996 teaches valuable lessons about the soundness of our legislative system. Consider the following:

-- Lobbying is an essential part of the process. Yet it has been a target of those critical of the nation's legislative system. I can think of no other way that Congress could have received the volume of information and guidance necessary to understand and act on the technically complex issues surrounding the local telephone marketplace. Representatives from companies throughout the telecommunications sector were able to explain the interrelated technologies involved, outline the intricacies of the markets likely to be affected, and describe the probable effects of various proposals.

Congress, ultimately, had to determine a course of action. But the raw data and experience provided by the industry were invaluable.

-- The states are crucial laboratories. The process of allowing alternative providers to compete in local telephone markets with the former regional Bell operating companies and other entrenched local players was pioneered at the state level. Progressive state regulators and legislatures first unleashed the forces of the free market. And it was at the state level that companies first identified key competitive issues that became linchpins of the new federal law. If the states hadn't blazed the trail, federal legislation leveling the playing field would likely never have been written.

-- There is no substitute for federal action. As progressive as some states were in implementing competitive environments and as effective as some companies were at opening markets, it was clear that fighting company by company and state by state would be an arduous, drawn-out process for a fledgling competitive industry. Before the federal legislation was signed, about half the states had initiated proceedings to force big local telephone companies to adopt administrative and physical connections between their telephone networks and those of competitors. The inevitable differences between state regulations created a confusing patchwork for multimarket players striving to execute a national strategy.

Although the bill recognizes individual state initiatives, it imposes a consistent co-carrier regulatory scheme, creating a competitive environment in all markets. It would have taken years to achieve uniformity in all 50 states without federal action.

-- Compromise works. It was crystal clear to those of us fighting for the right to compete on equal footing with the Baby Bells that local phone markets needed to be pried open. But a view based solely on self-interest has limitations. The former regional Bell companies had competitive issues and individual priorities too. It took the legislative process to identify and harmonize these disparate elements and create a statute that provides incentives to various segments of the telephone industry. As a result, the Baby Bells will, it is hoped, race to comply with provisions governing local competition in order to gain federal approval to enter the long-distance market, thus spurring local-service competition. Without Congress arbitrating competing interests and fashioning compromise, that linkage would not have evolved.

Let it be duly noted: In this instance our system worked. The legislative and executive branches, controlled by different political parties, mastered the fundamentals of a technically complex business, addressed the public interest, and responded with a well-crafted law passed in the face of considerable opposition from powerful special interests.

archive