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Cingular megamerger prompts VoIP warning

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If you need a guide to the future of telecoms, it seems, just remember the old anarchist joke: "Whoever you vote for, the government gets in."

In this case, it doesn't seem to matter how "revolutionary" or "disruptive" the technology is that's giving Emergent pundits a hard-on this month; for at the end of the day, the dinosaur telco incumbents always seem to tighten their control.

The Federal Communications Commission's Michael Copps, ruminating on the merger of Cingular and AT&T Wireless, seems to have felt this icy chill too. The FCC gave its formal blessing to the union this week, resulting in the creation of the largest mobile phone network in the US, and one of the most powerful in the world.

In a typically thoughtful, but unusually pessimistic warning that goes far beyond today's concerns, the former Clinton administration trade official points out that for the first time Bell companies will control over the half of the wireless market. Earlier this month Copps warned that the internet was dying, under pressure from vested interests who want a closed network, but his words were almost completely unreported. Now, he points out, both Cingular and the erstwhile No.1 carrier Verizon were formed from amalgamations of local Baby Bells. SBC is owned by SBC and Bell South AT&T Wireless, meanwhile, has Ma Bell in the DNA: it's a spin off from the mothership itself.

"The chance that wireless will compete effectively with wireless incumbents is diminished," he warns. Regulators call this "intermodal" competition, and it's a reality, with mobile operators in more saturated markets, such as Europe, vowing to make the landline redundant. But Copps thinks this less likely to happen now, and cites the majority FCC judgement in his support.

"Can we expect that Bell-owned wireless carriers will compete tooth-and-nail against their wireline parents? I don't think so," writes Copps. "Even the Order agrees: 'The acquisition will also affect intermodal competition through the likelihood that Cingular will not pursue AT&T Wireless’s extensive plans for wireline replacement offerings.' It also notes that rather than developing products designed to compete with wireline services, "Cingular has developed and marketed many of its wireless products and services to complement – and specifically not to replace – residential wireline voice services".

The FCC has slapped Cingular co-owner SBC with $8m in fines for failing to comply with its competitive obligations, including one fine in 2002 of $6m.

Copps castigates his fellow commissioners for dismissing the problem. He's perplexed by the justification that mobile was never really a competitor to landlines. That's what the majority opinion argues, stating that "'most wireline customers do not now consider wireless service to be a close substitute in the antitrust sense for their primary line obtained from a wireline carrier,' and because 'there remain qualitative differences between wireless and wireline services.'"

He adds, sarcastically, "I guess this means we won’t be hearing so much rhetoric in the future about the power of wireless as an intermodal competitor."

Copps is a fan of VoIP, which has real competitive potential, but points out that "VoIP [companies] are still reliant on the incumbents - a fact many people seem to forget in their revolutionary enthusiasm.

"But we need always to remember," writes Copps, "that as end-users of facilities-based carriers, VoIP competitors are beholden to the Bell and cable companies."

"We can cross our fingers and hope that growing duopoly does not discriminate so as to snuff out growing competition - but absent any commitment on the part of this Commission to insist on non-discrimination rules, I remain concerned for independent VoIP providers."

And with the US falling behind the rest of the world in broadband choice and penetration, he issues this reminder:

"All customers desiring VoIP for their voice service must subscribe to expensive broadband services. As the U.S. continues its free-fall broadband descent - we are now Number 13 in the world in penetration - and with broadband prices still out of the reach of many Americans, there is much to be done if VoIP is to fulfill its potential."

Placenta party vs. Manifest Destiny

We must apologize for quoting Copps at such length. We only do so because no one else will.

The man who warned us that the internet is in mortal peril earlier this month is an optimist, but he's also a realist. But no one ever seems to reads ever the commissioners' dissenting opinions, let alone report on them - even with this citizens' army of weblog vigilantes we keep being told about. Which is a pity, as the Commissioners, being reporters too, have plenty to tell us and they don't even feel obliged to encode it in politespeak.

Then again, we doubt if very many professional journalists, let alone citizens with better things to do than pore over government regulations, have read the FCC's 112 page majority opinion on a decision that will affect mobile phone users for a generation. We couldn't find one "citizen weblog" that examines the FCC's decisions. Stack that against the hundreds, possibly thousands, of Wi-Fi happy or pro-deregulation weblogs, and you have to conclude that people who write about technology are more interested in finding a comforting, consequence-free kind of placenta where there's no bad news, but one, and only one certain outcome: a joyous birth to look forward to.

Bootnote #1: Some of Our Intelligence Is Missing! Pt.496 Readers weary of the "my computer ate my homework" school of technology marketing excuses (as practiced by Google and the FBI) might enjoy this gem, from the FCC's archives. SBC was pleading against a large fine and produced this in migitation:

"SBC reminds us that it deployed an Advanced Intelligent Network-based shared transport product as required by the SBC/Ameritech Merger Order," the FCC noted. Crikey! But the FCC wasn't at all impressed by the deployment of an Advanced Intelligent Network-based shared transport product at all. "However," their adjudication continues drily, "the mere act of compliance with one portion of the law does not insulate SBC from the consequences of significant noncompliance with a different portion of the law." So there.

Bootnote #2: How Long Can I Disrupt You? "The concept of disruptive technology is not the only daft idea floating around to be lapped up obediently by the business community. There are others. But the way these dingbat bromides go unchallenged makes you wonder whether anyone can think independently anymore," writes one critic. We'd put money on something vital missing from either the hypester's infant milk supply or more likely, perhaps, the lack of a normal adolescence as the cause for permanently hyping "revolutionary" technology without following through the most basic economic consequences. Er, so is this how "Manifest Destiny" came about, then? There's only one conclusion to that, too. ®

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