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How New Cable Services Favorably Impact Local Telephone Service

The breakup of the Bell System in the mid-1980s and the Telecommunications Reform Act of 1996 were supposed to inject competition into the local telephone market. Instead, the structural changes that have resulted have only made things worse.

Local telephone company monopolies are stronger than ever. Not only are the same old telcos the only source of telephone service for most of us, they've used the opportunity to merge into a few mega-corporations. These huge monopolies have successfully stymied every effort to provide most consumers with competitive service. In California, the two big monopolies are SBC Communications, which recently purchased Pacific Bell, and GTE, which has merged with Bell Atlantic to form Verizon. Both are notorious for their unwillingness to open their franchises to competitive telephone service. They've used every law, regulation, and political stratagem to protect these monopolies and keep prices high. So far, regulators haven't done much about it.

New cable services promise competition for the local telcos. In addition to traditional television programing, advanced cable services can offer both telephone service and data-communications services -- access to the Internet -- at competitive prices. For a long time, cable operators only talked about this possibility. Today, some are investing billions of dollars to make it a reality.

For seniors and low incomes consumers, small businesses, and others whose telephone rates have gone through the roof without relief in sight, cable offers a welcome alternative to overpriced services. Everywhere cable has offered a competitive service -- like high-speed data service for personal computers, now a reality in parts of California -- telcos have immediately dropped their prices and tried to improve their service. In some communities, cable operators are also offering local phone service priced below what the Bells and GTE are charging. Once broadband cable is widely deployed, competition across the board will mean consumers finally have choice in how they communicate.

NetAction supports moves to promote price-dropping, service-improving initiatives in the telecommunications market. New cable services can do this. NetAction encourages the development of a comprehensive, capable cable network that provides consumers with real competitive choices for local telephone service.

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