Date: January 14, 2003
Contact: Audrie Krause, Executive Director
Phone: 415-215-9392

NetAction warns that FCC rules change could cost consumers $9 billion in lost savings 

Krause says anticipated FCC action would be an "inexplicable assault on consumers."
San Francisco, CA - NetAction, a California consumer advocacy group, warned today that anticipated Federal Communications Commission rules changes could cost American consumers  $9.2 billion a year in lost potential savings by shutting down the competition that has only recently begun to reach the local telecom services market.

NetAction spoke out as the Senate Commerce Committee was hearing testimony from FCC members on telecom competition in America.

Audrie Krause, executive director of NetAction, said recent research by competitive telecommunications companies shows that a fully competitive local telecom market like that envisioned by Congress when it passed the Telecom Act of 1996 would save consumers over a $ 1 billion in California alone.  That translates to a savings of $75.40 each for California's 14.3 million phone customers. Per customer savings would be even greater in a tiny state like Delaware where the state's 382,000 phone customers would each save an average of $143 per year.

A fully competitive local telecom services market would mean lower prices for everything from high-speed Internet access to simple voice calls, Krause said. "But these consumer savings will be lost if the FCC goes through with gutting the key market opening provision of the Telecom Act."

The FCC appears on the verge of eliminating the provision of the Telecom Act that requires the Bell monopolies to provide leased capacity on their publicly subsidized local network to new competitors at reasonable wholesale rates. This network leasing has been the foundation for the local service that is finally making itself felt in some states.

"After seven years, we are finally beginning to see some tangible benefits of competition in the local telecom market, and that competition has been made possible by the network leasing requirement of the Telecom Act which the FCC now wants to eliminate," Krause said.

Krause pointed out that in states like California, New York and Michigan where regulators have been persistent in enforcing the network leasing requirements, healthy local telecom competition has taken root. Consumers in those states are not only getting offers from new competitors, but the dynamics of a free market have forced the Bell monopolies in those states to improve their offers to consumers.

"By way of adding insult to injury, the potential FCC changes would not only decimate the network leasing requirement, they would leave the states powerless to enforce it," Krause warned. "This action by the FCC would be an inexplicable assault on consumers in favor of the four big regional Bell companies." 


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