Divestiture Essay and More
Stakeholders Information Forum"
OUTLINE OF PLAN
CITIZENS AGAINST REGULATORY EXCESSES
This Outline of Plan describes the efforts and strategy
underlying the activities of a group of informed California citizens, concerned
about the ill-conceived efforts of the California Public Utilities Commission (CPUC)
- this, as it continues to do serious harm to the interests of electric power
and telecommunications users, shareowners, employees and retirees.
The Plan spells out the objectives and structure of this small volunteer
movement to counter further such PUC mischief. Citizens Against Regulatory
Excesses (CARE) is a grass roots volunteer group of utility stakeholders, i.e.,
employees, retirees and shareowners - a coalition whose aim is to inform
Californians about regulatory malfeasance, and, subsequently bring political and
media pressure to bear on those who set and administer utility policies in
The Commission's strategy for introducing "dial tone competition" in California
is probably the most destructive and ill-informed action it's taken in its long
history of using telephone rates and policies as mechanism for pursuing social
engineering political strategies. Such tactics were reasonably tolerable in a
setting where cross subsidies occurred within the offerings of a single monopoly
company - and thus, the impact on the overall customer body and shareowners
tended to even out. Policies such as UNE-p rate setting are among the most
egregious CPUC actions.
The Commission’s later, and even more destructive regulation of “UNE” (Unbundled
Network Elements) lease rate pricing for “so-called” competitors, has imposed
unspeakable losses of jobs, tax revenues and sales by industry suppliers. The
impact of these actions against California’s “stakeholders” (SBC shareowners,
ratepayers, employees, retirees and suppliers), has been even more devastating
and irresponsible. Its ideological implementation of the “Telecommunication Act
Although this iteration of the Plan deals primarily with telecommunications
issues (because its constituency is largely drawn from this field), its overall
objectives include the equally destructive mishandling of electric utility
The Plan is organized under these major headings:
• Plan Purpose, Objectives & Strategy
• Principal Issues
• Organization & Plan Implementation
• Exhibits & References
California's regulation of public utilities has been
characterized by a historical and never-ending adversarial mindset on the part
of staff and many commissioners - a posture which traces to the early days of
its existence, when it was known as the California Railroad Commission.
Because of the excesses of early railroads and oil companies, and their
customer-be-damned behavior and actions, tradition has caused this state body to
typically treat all utilities as enemies and victimizers of users of such
services. This has, over the years, worked to the long term disadvantage of
utility users, employees and shareowners...making them easy targets for
anti-business critics in media and academe.
For the past 25 years or so, a left-leaning "consumer movement" has exacerbated
the problem - especially the TURN (Toward Utility Reform and Normalization)
group, a leftist organization established by an East Coast social activist
émigré and a number of anti-business public interest attorneys. What marginal
good these groups have done for the health and quality of utility service in the
State, has been more than offset by the short range expedients and inadequate
long range planning and technology provisioning tactics, the utility community
has been forced to engage in to accommodate their maneuverings.
The combination of adversarial commission staff meddling and the ill-founded
consumer movement, has resulted in what many of us in the industry characterize
as eternal "poverty engineering" - i.e., of delaying modernization, inability to
offer new and useful revenue generating services, foregoing efficiency improving
technology and practices...all, in favor of keeping artificially low and
subsidized subscriber rates. This even has included legislating a publicly
(customer) funded agency within the Commission to legislate and litigate against
the utilities. No better model of institutionalized big government/socialism and
confiscation of private property is likely to be found, than California's
utility regulation tradition and bureaucracy.
This inflammatory rhetoric is to emphasize the reason why large numbers of
utility employees, who by necessity had to swallow their resentment over the
years (because of PUC life- and-death control of the industries allowed no other
choice), are now free to politically challenge this cancer on California
industry, and, its damaging influence on millions of rate payers and investors.
Finally, what is probably one of the best kept business secrets around, is the
100+ year history of an industry which has been characterized by remarkable, but
unrecognized traditions of service and accountability...traditions verging on a
religious calling by employees and telecom's founding policy setters. Because of
the traditions which created the telephone monopoly so many decades ago, the
work force has been indoctrinated to give service no matter the cost or
inconvenience. Regrettably, this also has resulted in a passivity about doing
battle with the industry's detractors.
In a narrower context, the motives of CARE's organizers are not unlike what
galvanized a majority of Americans at the polls in November 1994 - of starting a
political revolt by individuals tired of having bureaucrats and politicians
impose their centrist/socialist ideas on our wallets and market choices.
PLAN PURPOSE, OBJECTIVES & STRATEGY
The purpose of CARE's Plan is to initiate and motivate a Statewide activist
coalition in the community of utility stakeholders - those, whose interests have
been compromised and eroded by California's regulatory and political climate of
the past 40 or more years. As noted above, the aim of this coalition is to
apprise California citizens and rate payers, just how badly their interests have
been served by the CPUC and its minions...and, hopefully, by such illumination,
bring political and public pressure on regulators to let the market place do
what it does best...provide the greatest variety of quality/reliable utility
goods and services at the lowest possible costs.
Hopefully, this effort will promote leveling the playing field on which utility
service is offered by all contenders. That is, remove all artificial constraints
on any provider willing and able to enter any market that can be created
and...and, similarly, not favoring any entrant over another through use of
outmoded fantasies regarding "monopoly power", anti-competitive strategies and
Among Plan objectives, is formation of a small "core group" of individuals
who have acquired skills on the local scene in affecting political events -
this, to contact like minded-individuals around the State to "socialize" various
regulatory issues, and, to encourage such persons to form their own groups to
extend these efforts to still others in their spheres of acquaintance and
interest. Given, that at the outset, most of this activity will involve telecom
personnel (active, retired and shareowners), contacts will be established
through existing informal channels of "clubs", interest groups, professional
societies and the like.
Included in Plan's strategies, is compilation of a series of "position
documents", "letter outlines" (every letter should read differently), flyers and
the like to be used for Commission correspondence, op ed pieces, letters to
politicians, calls to talk shows, and, personal appearances at public hearings -
both CPUC and other more localized political settings. It is also intended that
as part of CARE strategy, it will seek to collaborate with other groups pursuing
this same agenda.
The overall aim is to let the public enjoy the insights of hands-on-experts who
know the real consequences of what regulatory and judicial meddling has done to
raise their true utility costs, deny them service options, and, do great
economic harm to the investors who have underwritten costs of telecom and other
utility services over the years. There is still great unfocused anger in
America, that a leftist/anti-business Department of Justice, and, a European
immigrant socialist judge, left them sitting in the middle of the biggest
government screw up in history. More on this later.
The principal issues to be addressed are those which can be
related to the backdrop of each citizen's individual self interest, experience
and expectations. Because telecom is a highly complex and arcane subject, and,
about which the ordinary individual has only the slightest knowledge, those
opposing full, immediate and open competition must not be allowed to make these
complexities the smokescreens for their opposition. Similarly though, one of
CARE's strongest positions is, that current utility efficiency, reliability and
accountability to users, has evolved from the 100+ years of sometimes painfully
learned lessons of "what works and what doesn't"...that quick-in and quick-out
profitable "cream skimming", comes at the ultimate expense of the ordinary user,
ratepayer and shareowner. The main issues include:
• "Universal Service"
• Unlimited And Immediate Freedom To Offer Any Legal Telecom Service
• Eliminate Constraints On Service Providers Manufacturing Equipment
• Preclude Violation Of 4th Amendment "Takings" Rights Through Forced Sale Of
Facilities Or Equipment To Competitor
• Restore Availability of "One Stop Shopping" To Customers
Who Want The Choice Of Simplicity And Accountability From Utility Providers
• Delay Open Competitive Local Service Until Procedures and Technology Are In
Place To Ensure "One Call" Accountability And Reliability (For Service
Impairments And Fault Location in a Multi-Vendor Environment)
• Defund and Disband The Commission's "Ratepayer Advocate" Division -Customers
and Shareowners Should Not Have To Fund Legal Pickpockets
• Disband The CPUC - Assign Any Needed Residual Oversight Functions To Other
State Agencies Such As Weights & Measures, Franchise Tax Board
These issues are discussed below in further detail for the
benefit of readers not currently tracking the regulatory and competitive scene.
A more concise treatment of the issues is to be found in the attached Project
Universal Service is the foundation of the telephone franchise - a social
contract which can't be ignored or canceled in order to create "false telecom
competition". In context of today's technology, this means the "basics"
represent universally affordable and available "dial tone", plus, its "digital
equivalent" for tapping into the "information world" - something which every
citizen must eventually be able to access.
Current Commission plans remain to foster local service competition without
imposing requirements on "cream skimmers" for full participation in a NECA-like
pool (National Exchange Carriers Assn.) mechanism to compensate existing
universal service providers for revenue losses on their stranded low-return
exchange investments. The high payoff services attractive to "competition",
currently furnish the subsidies that keep much of the universal service rate
structure below cost of service delivery...e.g., this includes "local toll",
Centrex, Hi-Cap (T-1), private line, and the like.
Unlimited Market Access & Unrestricted Service Offerings
Unlimited Service Offerings are proposed to be open to virtually all service
providers not currently operating under the regulatory rules imposed on the
existing franchise holders (Telcos, energy providers, etc.). Present Commission
strategy, as demonstrated by consumer rip-offs on non-Telco coin telephones,
hit-and-run long distance and operator service companies, symbolize what can be
expected when competitive service providers can enter or leave the market at
will. If these are to be the rules, then such rules should apply to all
providers. Obviously not a desirable policy.
The fair and "consumer friendly" solution for California rate payers and
investors, is to recognize utility service as a commodity in the market place
just like supermarkets, building contractors or employment agencies. Customers
should be allowed to buy Nordstrom-grade service (one stop/end to end
accountability), or, Home Depot and 98 Cent Store (do it yourself or buyer
beware) options. With the Commission's only control being that service providers
connecting to the "Public Switched Telephone Network" be precluded from doing
harm to that network, and be accountable for any irregularities they might
No Constraints On Equipment Manufacture
Precluding telecom utilities from Equipment Manufacturing makes no more
sense than telling Ford Motor company that it can't design and manufacture
engines - that they must go to some competitor for such vital components...like
Pac Bell having to go to AT&T for technology it needs to provide services that
will compete with AT&T's. today's world, market gains are best achieved with
"systems solutions" - of market needs defined by what customers want and will
pay for, then designed and "architected" to uniquely meet those needs.
Each service provider has a mix of demographics, geography, economics and
customers which it typically understands best. It should not have to go to
competitors, open its kimono to share its strategies, then wait for a suitable
development to materialize...or worse, continue the present bassackwards
doctrine of adjusting strategy to whatever technology its supplier's designers
conclude is right for the market. This has been a serious flaw for virtually the
entire history of telecom - of scientists and engineers deciding what customers
will get...the one size fits all approach.
Given that Bellcore became a historical monument to Federal Government's
treasonous destruction of the national treasure of Bell Labs, the RBOCs should
have been able to split up what's left of Bellcore and recruit those personnel
who wish, as systems engineers and designers for their own technology systems
and development resources. Each RBOC, such as Pac Bell (SBC) is big enough and
sufficiently capitalized to become economic power houses in their own right.
Preclude 4th Amendment "Takings" Dictates On Market Opening In California
Current regulatory and judicial attitudes are showing distinct inclinations to
violate Telco (and energy) service provider's 4th Amendment rights by forcing
existing utilities to transport or otherwise share their capital assets and
facilities, with those who wish to avoid costs of acquiring their own (in order
to compete in certain juicy parts of existing provider markets).
This makes as much sense as a new resident coming into a neighborhood and
insisting, with support of the law, that parts of current property owners land
and improvements be leased to the newcomer so he can enjoy something he's not
previously owned at that locale. Or, perhaps more aptly, an aggregator of small
railroad properties going to the ICC and insisting it needs to have access to
Santa Fe's or Union Pacific's trackage to flesh out a new competitive system. If
new players want in, they should be prepared to build or buy whatever
capabilities they need to start their services.
Rate payers and investors have already been sufficiently penalized and deprived
of their capital by Commission imposition of such "takings" debacles as
co-generated and wind power purchase mandates, "lifeline" and hearing impaired
telecom service dictates, unrealistic and obsolete depreciation schedules,
unallowable construction margins or increments in the rate base, etc..
One Stop Shopping
Rate payers and telecom users continue to be denied the benefits of "One
Stop Shopping" for telecom service. As noted earlier, there is no justification
in today's marketplace to force utility users to squander their time and
energies, learning how to define and assemble a range of services and equipment
suited to their particular needs. Systems integrators are free to operate in
virtually every other area of technology and customer service (or products).
Fragmentation, whether for telecom or energy, makes it exceedingly difficulty to
ensure reliability, accountability and quality control. The bureaucratic and
judicial meddling underlying this situation, imposes economic and service
penalties on the end user and investor, which are totally unjustified. It
further diverts tax revenues to fund outdated and needless bureaucracy required
to regulate and police such arrangements.
A hundred plus years of ever better utility reliability, availability and
accountability did not happen because some judge, government lawyer or
regulatory bureaucrat mandated it. Service accountability is synonymous with
system centralization and managing an aggregation of sub-systems and elements as
an integrated whole. This applies to instrumentation, practices, policies,
training and designation of responsibility...plus, the allocation of resources
to ensure continuity of service.
Those of us who have been involved with emergency planning and restoration of
large networks and services, learned painfully and slowly what it takes to
ensure plants are designed and managed to survive - or, be rapidly restored when
Acts of God or other massive disruptions occur. The many collapses of both
telecom and power networks since Bell Divestiture and regulatory meddling in
power grids, show vividly what happens when natural systems are dismembered to
accommodate social engineering theories and political fantasies.
Commission action on partial introduction of local service competition should
not be allowed to proceed until a fail safe system of integrating management,
provisioning and restoral of such services. Any such action or rule making
should occur only after full public hearings and the input of those truly expert
in such maters.
Failing that, there is every reason for class litigation by users, shareowners
and industry employees, to enjoin such incompetent actions. Current Commission
plans to introduce local service competition, then figure out accountability,
maintenance and reliability problems later, is clear malfeasance and
CPUC Ratepayer Advocate Division
The wave of socialistic consumerism which has swept California in recent
decades, brought with it the CPUC's office of Ratepayer Advocacy. This has been
a ploy by TURN and other social engineering activists to fund anti-owner legal
and regulatory actions, using the earnings of the service providers of the
State. America, finally awakening to how badly its citizen’s interests have been
served by over zealous bureaucrats and "public interest" attorneys, is in the
process of reversing these travesties - this with new-breed politicians elected
to make such change in November of 1994.
One of the best shows of public interest the PUC could display, would be to
defund and disband the Ratepayer Advocate organization.. Their not insignificant
budget would be a good way for the Commission to show good faith for further
reducing State budget deficits...no customer would ever know the difference.
Disband The CPUC Entirely
Most of the reasons for having a CPUC have disappeared with changes in
technology and introduction of competition in the markets it claims jurisdiction
to regulate. Except for spectrum management and a few international treaties,
there is strong sentiment in Washington to eliminate the FCC as a costly and
delaying presence on the competitive telecom scene.
The author of this paper has first hand knowledge of how the FCC bureaucracy
delayed introduction of cellular telephony in the US by 10 years. The technology
was invented at Bell Labs, but not allowed to operate in US markets, pending
bureaucratic meddling and social engineering running their desired courses.
The CPUC has been even more destructive to efficient planning and deployment of
new services and technology in California. Were it not for the "survival skills"
Pac Bell managers and engineers have developed to outwit the PUC's bureaucrats,
telephone service would be even more outdated than it is. Pac Bell and GTE were
among the very last to complete the transition to full digital switching - a
situation which should have been the direct opposite, given the high rates of
growth over past decades (which would have been more than adequate reason to go
"full digital"). This delay has caused the local Companies to incur continuing
high maintenance and staffing costs which could have foregone much earlier with
faster technology changes.
The PUC should be scheduled for earliest possible disbanding, and, those few
remaining licensing or oversight responsibilities, integrated into other
agencies appropriate for central State government.
ORGANIZATION & PLAN IMPLEMENTATION
As noted earlier, the CARE project is perceived as a pure grass roots
endeavor of stakeholders who have decided it's time to put a stop to
bureaucratic meddling with their careers, bankbooks and services. For this
reason, as has been the case with experience on other small group activist
endeavors, loose networking and support of a set of commonly agreed to
objectives, is the best way to get started. If the effort takes on greater force
and size, this approach may have to be revisited.
It's been perceived that CARE would start with as a small "core group" in the
SFO East Bay (where it can readily access many of the players already jerking
the Commission's chain), and then hook up with regional teams in the North,
South and Central parts of the State. As with the grass roots taxpayer activist
groups on which it is modeled, formal 501C status is not immediately planned –
flexibility of the informal group structure has ensured the anonymity for
constituents whose public persona is not otherwise compromised.
An attached exhibit contains a sample organization and flow diagram,
illustrating how it's conceived CARE would "do its thing". At this point, Lou
Marracci, Don Lively and Ken Walters have been handling the getting-started
chores. Response from colleagues, friends and other stakeholders around the
State, has enabled establishment of other local “cores”. The recently
established “Telco Retirees Association” (4000 formal dues-paying members) has
been illustrative of the serious impact that PUC regulatory foot dragging, has
imposed on large numbers of CA telecom stakeholders.
Continuing follow up on organization details will be maintained as others wish
to get in the game…this, including any need for a more formal structure.
Given the PUC's initial albeit, apparent haste to get its deregulation
agenda in place, time remains of the essence in raising public awareness and
concern over what's happening - especially to advocate public hearings and press
for more expeditious Commission rulemaking on matters such as the long ignored
FCC “Telecom Act of ‘96” mandate requiring annual UNE rate reviews.. This
dictates an ongoing campaign of letters and phone calls to commissioners,
elected officials and news outlets. The key to getting politicians and
bureaucrats to do what they may not want to (or don't understand they should
do), is to flood them with correspondence, op-ed letters, “public comments”
appearances and attention from elected officials they rely on for budgets.
Sample subject matter and some typical letters are included in the Exhibits.
There are places for both "essay type" and short "potboiler notes". Longer
missives are appropriate to those situations where specific technical,
"consequence/cause-effect" or like controversial tutorials are appropriate.
Shorter letters dealing with a single matter or just the subject in general are
best for op-ed pieces or building the "volume" to State officials and
For those CARE supporters and activists who feel so inclined and expert, it's
worth while getting acquainted with your local op-ed editor for some depth
discussions or guest commentaries.
Funding The Project
The several undertakings the authors of this Plan have worked on, relied on
voluntary "passing the hat" to cover postage, printing and phone costs. By
functioning purely as citizens pursuing their interests in a free association
with other like minded persons, it's possible to avoid the hassle of non-profit
filings or other legal encumbrances (as noted above).
In the case of our local taxpayers association, individual board members handle
most day-to-day expenses out of pocket. When a big "mailing" is needed, we
generally contact 40 or 50 of our less active, but interested, constituents for
small donations. The policy also worked well when we got out petitions to stop
TCI and our Board of Supervisors from taking C-SPAN off local cable systems.
As this Plan has caught on, linkups with other constituencies have materialized,
and thus make funding a more significant factor...that worry can take its place
at that time.
This Plan, while wordy and sometimes repetitious, is intended to remind many
of our potential advocates, of just how our, dividends, paychecks, pensions,
service integrity and, the future of our former employer's businesses, are being
compromised by bureaucratic meddling and malfeasance.
The name of the game we seek to play is political pressure and influence.
Because we are not equipped in any manner to run a high powered initiative or
"turn out the vote" campaign, the tools we can use most effectively, are the
ones each of us as individuals can easily employ on our own.... op-ed letters to
local papers and periodicals, calls to reporters and editors, letters to
politicians and commissioners, calls to commission staffers and elected official
and their staffers.
These are agencies accustomed to dealing with highly organized and savvy
consumer activists and public interest lawyers - they are not comfortable with
mass protests from individual citizens who clearly know what they are talking
about, and, who are willing to create embarrassment and public criticism of
"public servants" used to operating outside the glare of expert public censure.
The aim of CARE is to produce the maximum amount of embarrassment and
defensiveness for the bureaucrats who have been jerking the utility industry
around for most of its history, and, in the process, customers, employees and
Finally, this activity has no formal linkage to any of the utilities in
question. We encourage active employees, shareowners and impacted rate payers to
support our efforts - recognizing they share the same vulnerabilities to
possible censure, troops in the trenches always have.
The attached exhibits include materials which will serve as background for
those wishing to take part in the CARE endeavors, they include:
• Project Memo 95-6...a brief description of the CARE project
and how it might be implemented
• Newspaper clipping...the "electric power competition plan and utility
deregulation hazards", sample arguments for open competition
• Letter to CPUC President
• Other typical sample letters
• CPUC Commissioner names and addresses
It is hoped this sample correspondence, the op-ed pieces,
CPUC lists and other materials will be augmented and built on by those willing
to get into this adventure. Lou Marracci can reached at (925) 935 4626 - my
office number is (925) 283 6418.
3412 Mc Ellen Ct.
Lafayette, CA 94549
12 June 1995
29 July 2004 Revision
A Telecom Stakeholders
The purpose of the following commentary is to explain and
discuss need for (and concepts about), a “Telecom Stakeholders Information
Forum” (TSIF) – i.e., a mechanism for acquisition, distribution and exchange of
relevant information among those individuals and organizations whose interests
are involved in the telecom world of the post-1984 Modified Final Judgement
“consent decree”. The MFJ is that judicial and regulatory action of the US
Government which totally dismembered the nature and viability of America’s
historic telecom industry – especially, its “Bell System components”.
The elements underlying creation and operation of “A Telecom Stakeholders
Information Forum” are addressed in the following context:
• Terms & Definitions
• The Telecom Stakeholder Information Vacuum
• A TSIF Organization
• Information Flow
The post-1984 telecommunications world is a vastly different
setting for stakeholders in this industry – far different than what obtained for
80-odd years after Theodore Vail struck his 1920s “Kingsbury Commitment” bargain
with the US Government. That remarkable social contract between AT&T and people
of America, provided for “universal telephone service”, "national rate
averaging” and “management of the nation-wide network” (regardless of who owned
its components). All this in return for agreeing to continued and ongoing
“reasonable regulation” by government, of telephone service rates. Given this
“different telecom world”, a section below provides definition of many new terms
and concepts now in play
This ruling of a “reasonably predictable” business environment, enabled the Bell
System to deliver and extend the world’s most advanced, reliable and reasonably
priced telephone service known before or since. It also allowed AT&T to evolve
its Bell Telephone Laboratories – they, to become the world’s premier and unique
scientific enterprise. This organization, consisting of both a Research and
Systems Engineering element, (RS&E), and, a Technology Development Division. The
latter, funded by earnings from Western Electric’s equipment manufacturing and
sales (of products derived from Labs inventions) RS&E was a pure research arm,
underwritten by a few pennies in a “license contract” from each operating
company subscriber’s phone bill. The RS&E piece of the Labs was considered to be
the world’s premier private research establishment, second only overall, to that
of the University of California (Berkeley).
Given the virtually direct public funding of the RS&E organization, its findings
were made widely available to the rest of the scientific (and public) world.
This, through its various publications, Bell Labs Record, Bell System Technical
Journal, membership in various organizations, etc.. Add to this flow, the AT&T
“Bell Telephone Magazine” effected for all Bell stakeholders (employees,
shareowners, suppliers, telephone subscribers, et al), a wide open forum for
acquisition and exchange of information relevant to their shared and common
Because post-Kingsbury “regulation” was a fairly stable and straight-forward
process, there was little need to provide stakeholders with any significant
amount of detailed knowledge re what transpired in the telecom regulatory
environment. As long as high service standards were maintained, and rates of
return on capital investment remained within regulatory dictates, there was
little to keep stakeholders wired in about.
All that began to change in the 1950’s, when the US Department of Justice (upon
FCC coaching), decided it was time to rein in the scope of AT&T’s “market
efforts”…particularly those of Western Electric. Western (growing out of BTL’s
research) had developed AM radio broadcasting (New York’s WEAF), sound motion
pictures, broadcasting and sound equipment, etc.. All of which the Feds strongly
disliked (and viewed as anti-competitive). The result was the 1956 Consent
Decree, - a deal with Washington which effectively confined Bell to just
telephone service and equipment manufacturing (of course being allowed to remain
in the national defense equipment and research fields – products and discoveries
having great impact on WWII victories).
Things remained in this mode until the Washington social engineers decided once
again, that AT&T was doing so many things so well, that so-called “competitors”
couldn’t really compete – either with service or technology. Thus, came the 1984
Consent Decree – it, as the Modified Final Judgement of the 1956 Decree.
Now, 20 years later, the consequences of that mindless piece of regulatory and
judicial meddling, are clearly evident to those who take the trouble to become
informed. However, those consequences are virtually unrecognized by the vast
majority of uninformed “telecom stakeholders” – and, much to the disadvantage of
their respective interests.
For most of the post-MFJ period, things in the regulatory world have continued
to work against interests of telecom stakeholders (and really, the
“communications public” and nation at large). And, in today’s contrived
“competitive” telecom market, the stakeholders of the ILECs, now reside in a
virtual “telecom information vacuum”. The mainstream media, with its generally
“social engineering slant”, rarely report on legislative or regulatory
activities. The exception is when it can be implied that any such actions will
increase ILEC user costs. Rarely (even in the Wall Street Journal) is there
balance in reporting how much “unregulated competition” has already emerged in
terms of wireless, cable, etc.
Terms & Definitions
Given the enormous changes which have characterized the
post-‘84 telecom world, it’s appropriate that some relevant and significant
terms be defined – terms, which have come into play since that event. They
Telecom Stakeholder Information Forum (TSIF) – an organizational vehicle
which enables stakeholders in the regulated telecommunications world, to
interact via shared exchange of information relevant to the best interests of
those in the ILEC marketplace. Such an enterprise is not in itself, a lobbying
or “pressure” body - rather, a mechanism whereby individual or groups of
stakeholders are optimally informed to pursue their individual (or collective)
market, legislative, fiscal and regulatory interests. A TSIF is modeled on other
comparable bodies - they, formed to optimize the best interests of the “markets”
or “communities” they serve or function within.
Incumbent Local Exchange Carriers (ILECs) – the traditional “monopoly
carriers” of the pre-MFJ period…also known as RBOCs (Regional bell Operating
companies) under the MFJ.
Competitive Local Exchange Carrier (CLECs) – that body of telecom
carriers brought into being by MFJ and Congress – they, to conceptually offer
competitive alternatives to existing Telcos.
Stakeholders – they include ILEC shareowners, employees, customers,
unions, suppliers of technology and services, retirees, contractors, suppliers,
Telecommunication Act of 1996 – the legislation which Congress passed to
stimulate the local telephone competition that break up of the Bell System was
intended to accomplish (but didn’t). It’s major provision required that the
ILECs lease their “serving facilities” to CLECs at rates to be determined by
State regulatory agencies (and in accordance with the Federal Communications
Commission “model” – TELRIC).
Total Element Long Run Incremental Costs (TELRIC) – the now discredited
computer model the FCC dictates that State regulators must use to set lease
rates that ILECs can charge CLECs for use their facilities.
Unbundled Network Elements-platform (UNE-p) – the ILEC-owned central
office and network equipment, plus outside wiring to customer premise…i.e., the
facilities which the Government dictates that CLECs must be allowed to rent from
ILECS (to be re-branded and resold to former ILEC subscribers). In the SBC CA
area, this has been at about 60% below cost of constructing and maintaining
Armed Forces Communications Electronics Ass’n (AFCEA) – AFCEA is a
confederation of active, reserve and retired US Military electronics personnel,
plus suppliers, contractors and consultants. The organization’s purpose is to
optimize effectiveness of military communications and electronic systems. AFCEA
is not a lobbying force, but the medium which enables its members to work for
their individual or collective interests most effectively, and, from a fully
informed knowledge base.
Telephone Retirees Association (TRA) – TRA is a several thousand strong
organization of SBC (CA and NV) retiree stakeholders (very important ones) – it,
formed to ensure the best interest of SBC retirees and their dependants.
Citizens Against Regulatory Excesses (CARE) – CARE is a small ad hoc grass roots
group of stakeholders, established in 1991 to intervene with the CPUC re SBC’s
effort to enter the long distance market. Its members are SBC employees,
retirees and shareowners – all, who have subsequently been active in pressuring
the CPUC to set more fair UNE lease rates. CARE and TRA are typical types of
stakeholders to be found in a TSIF.
The Stakeholder Information Vacuum
Events subsequent to the “Telecommunications Act of 1996”,
the Congress and FCC legislation which imposed the mandates requiring ILECs to
lease switching and subscriber line facilities to CLECs , have taken a
persistent and often destructive courses.
The FCC–ordered annual re-pricing study of UNEs, is a clear example of how CPUC
foot-dragging (with its 3 year-delayed review of 2004), has proceeded well
beneath stakeholder and public “radars”. In a literal sense (despite contrary
court rulings), this is a 4th Amendment “takings” of stakeholder properties.
Returns on shareowners investments have diminished, SBC employees have lost
thousands of jobs, retirees have experienced erosion of earned-promised medical
benefits – and, suppliers of new technology and services have seen their markets
dry up (with attendant loss of tax revenues to the state).
Only in recent months, has there been a partial lifting of the “information fog”
– i.e., the stakeholder pressures on regulatory authorities, to recognize that
the world of the “Kingsbury Commitment” has long since disappeared from view.
Grass roots appearances before the Commission, organized PUC letter writing,
op-ed commentaries, etc., have made at least some Commission members aware of
consequences of their foot dragging. The California sectors of the
Communications Workers of America (CWA) mounted especially informative and
candid radio and TV commercials.
All of this ad hoc and uncoordinated effort however, illustrates why there is
need for an organized and focused full time deployment of such forces in an
AFCEA-like mode – this, to both keep stakeholders informed and
knowledgeable…and, also able through continued information flow-exchange, to
keep pressure on the regulators, politicians and telecom-using public.
A TSIF Organization
As with the Armed Forces Communications-Electronics
Association stakeholders, today’s ILEC stakeholders require this sort of
relevant adjunct to its existing market inputs for determining current and
future strategic and tactical planning directions…especially, information needed
to address the continuing roadblocks an out-of-date regulatory environment
presents. A TSIF is perceived to be such an organization. Such an
instrumentality is briefly described here. .
It is contemplated that the ILEC community would take the lead in creating an
arm’s-length framework on which the TSIF would be built. That is, as with its
membership in and support of other industry advocacy organizations, assign a
“core staff” and logistical support to formally define and activate the TSIF. It
would conceivably employ an “officer level” in-charge person, with an
administrative structure able to interact with all the other elements of the
greater stakeholder community – i.e., organized labor, retirees, suppliers,
contractors (and eventually shareowners).
Similar capabilities would be encouraged within the ranks of the rest of the
stakeholder community. A number of stakeholder organizations exist which already
have “public interface” components – functions which could be drawn on to
provide the TSIF interface – e.g. organized labor, telecom industry
associations, retiree advocacy organizations, various ad hoc retiree support
A TSIF as envisioned for today’s ILEC telecom world should
focus its efforts on these following objectives:
• Identification (and creation) of formal and informal
organization structures within the stakeholder community – vehicles, which can
take appropriate actions to optimize interests of such bodies and the ILEC
• Acquisition, publishing, distribution and interchange of information relevant
to the best interests of the entire stakeholder body.
• Develop linkage to “trade publication” sources for screening and forwarding of
relevant info to stakeholders – e.g., Telephony, America’s Network,
Communications Society, etc..
• Establish “speakers bureau” to accommodate “speech making” opportunities at
key telecom policy affecting organizations (and other relevant bodies).
• Form “linkage” to various telecom retirees organizations – i.e., interchange
of “interests” and respective objectives and activities.
• Create “connections” to existing “lobbying” organizations…NARUC, Exchange
Carriers, telecom “trade associations”, major telecom technology suppliers,
professional societies (IEEE Com Soc), etc..
• Develop an initial “inventory” of key individuals to recruit as members of
formal TSIF organization structure.
• Assuming there will be support by key ILECs, suppliers and
existing “interest groups”, develop a suitable information publishing
- Print media (newsletter, magazine ,etc.)
- Web page and “e-letters”
- Press releases
- Opinion letter campaigns
Bringing into being a TSIF, like most other previously
non-existent enterprises, should begin by “socializing” the concept and
perceived need for the capability, with key contacts and decision makers in all
of the “communities” involved…e.g.., ”Boards” of existing stakeholder groups,
external affairs decision makers in the carrier and supplier community, other
telecom trade and interest groups, plus relevant existing providers and
publishers of telecom info.
It is perceived that the first stage of this “implementation effort” would be to
establish a small “core group” of individuals already involved in addressing
this historically non-existent function. This, to assess whether there is a
genuine need for such an effort – then, place the “need and objective”
requirement before the decision makers whose approval and support would be
required to implement such an undertaking.
It is believed that this document can serve as a triggering device for initial
“socializing” of the idea.
31 October 2004
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