Wave Issue 0207 3/4/02 Article 2-03

***COMNET 2002

WAVE Issue #0203 2/2/02
Coverage of the COMNET 2002 conference in Washington DC. Two of
the panel discussions provided good insight into the issues of
telecomm regulation, and Tauzin-Dingell.

www.wave-report.com/other-html-files/Comnet2002.htm

We will continue to watch the story unfold with great interest.
Two concepts that have emerged as dominant factors in the success
of the bill so far are stimulating investment, and regulatory
parity. In the House at least, the ILECs seem to have
successfully shifted debate from how they failed to perform under
the 1996 Act, to how the 1996 Act affected their ability to
receive a return on investment in new infrastructure. The
faltering telecomm and networking markets no doubt aided the
shift, as lawmakers are eager to find new ways to stimulate the
economy. Part of the new focus is a redefinition of competition
in the broadband market, from ILEC vs. CLEC, to ILEC vs. cable
operator. Under this way of thinking, the ILECs seek regulatory
parity with their direct competitors the cable operators--who are
not required to unbundle their networks. In this scenario CLECs
are relatively unimportant players, more readily sacrificed.

ILECs are in no hurry to get Tauzin-Dingell passed. As long as
the bill is under consideration, it creates regulatory
uncertainty in the market. Uncertainty serves the ILECs; in
times of uncertainty customers tend to look to the established
market leaders, and avoid start-ups.