As any halfway-attentive motorist driving through our part of the country must have noticed, several billboards these days advertise, in one form or another, a smaller telephone company's determination to vie with "the big telephone company" for a share of the public's business. It is all part of the competition that has gone on in telecommunications since Congress deregulated the industry in the 1980s.
But the fact is (as some of those billboards go on to imply or state outright), the competition is, by its nature, unequal. There are numerous natural advantages which the established network of Bell companies possess, based largely on their name recognition, long-developed infrastructures, and superior prowess in what President Bush likes to call "capital formation."
Still, fair is fair, and the rules of a free-market society permit such advantages. What isn't so fair is the way, documented in this issue of the Flyer, that a large company can frustrate the incentives created by Congress that both enable smaller companies or those with specialized focus to compete and provide a means for impoverished customers to afford basic telephone service.
That's exactly what has happened, however, with the way that BellSouth, the monolith of the telecommunications industry in these parts, has handled subsidy programs for such customers that have been authorized by the state and federal governments. In the former case, the state has directed BellSouth, under its state license, to collect a small surcharge from its regular customers to help defray the monthly service costs of disadvantaged subscribers. In the latter case, the federal government provides an outright subsidy to defray the costs of installation.
As the article by Rebekah Gleaves in this issue indicates, a small company -- compelled like most such to contract with BellSouth for the services it provides its low-income customers -- was unable to get the larger company to pass on the collected subsidy amounts. Both the state attorney general, Paul Summers, and one of the three members of the Tennessee Regulatory Authority, Memphis' Sara Kyle, found BellSouth at fault, but two members of the TRA decided otherwise and the smaller company, without the infrastructure to process the subsidies on its own, was forced to discontinue its hard-wired telephone service.
This is an object lesson in how competition, though technically in force, can be rendered, in effect, null and void by a dominant company that knows how to play the seams of its relationship with government agencies.
As the telephone case makes clear, those in government charged with regulating utilities and other public-service industries have only a limited wherewithal. There's a clear moral to the story at a time when the president is suggesting that the new airport security forces to be created in the aftermath of the September 11th atrocities should not be federal, as such, but privately run under government regulation.