- The Washington Times - Tuesday, September 26, 2000

The president of Verizon Communications, one of the nation's biggest communications companies, said yesterday that the Federal Communications Commission and state agencies are preventing the industry from developing naturally, allowing an entree for foreign companies to buy U.S. telecommunications providers.

Revolutionary changes in communications call for revolutionary changes in regulations, Ivan Seidenberg, co-chief executive officer, said yesterday at the National Press Club.

"The landscape has changed so much in just the last five years that the list of the biggest telecom companies in the U.S. has changed almost completely," Mr. Seidenberg said. "However unintended, regulation has stifled progress in the deployment of new technology. This has dramatic consequences for consumers in the form of less choice, less competition, fewer services and misallocated investment."

He said regulations have created a low long-term growth outlook and riskier climate for investment in the United States. The market is driving up values of foreign telecommunications providers to the disadvantage of American companies.

"Investors rightly view the communications marketplace in America as both more competitive and more regulatory than that of our foreign counterparts," Mr. Seidenberg said.

He further criticized regulators' view of the communications industry as a collection of separate services. Local and long-distance telephone service, cable television, wireless and satellite communications and the Internet are no longer separate as communication companies race to merge and buy each other, he said.

Verizon, for example, was created by Bell Atlantic Corp.'s purchase of GTE and offers local and wireless phone service and Internet access. Competitors such as WorldCom and Sprint have expanded as well.

He also said European nations long ago abandoned the idea of separating long distance and local phone services.

Mr. Seidenberg argued that the current communications system, which involves numerous regulatory agencies covering artificially defined "local calling areas," is obsolete.

He pointed out that the newest forms of communication wireless and the Internet have no physical boundaries and that their prices are defined by market forces.

"These two markets are the focal points for virtually all the investment, innovation and growth in the communications industry," he said.

Mr. Seidenberg proposed basic elements to a new regulatory system, which included elimination of regulation at the state and federal level for the entire communications industry and deregulation of investments in high-speed Internet technology and services.

His views were not in conflict with those of top government officials. Congress is considering a number of bills that would lift some regulatory restrictions, and the FCC has proposed a restructuring plan.

At a conference in Atlanta earlier this month, FCC Chairman William Kennard voiced his support for technological advancements without government interference.

"Now is the time for you to invent … new ways of using your technology to provide service to the public," Mr. Kennard said. "The best thing we can do for ourselves is to give you the time and space to create and grow. So that is my pledge to you: to stay out of your way."

Ironically, Mr. Kennard said the larger and more established companies favor regulation.

"Regulation is too often used as a shield, to protect the status quo from new competition often in the form of smaller, hungrier competitors," he said.

But Verizon officials see regulation as a detriment, even if smaller companies are given a greater opportunity to gain market share.

"The bottom line … is that the current form of managed competition and economic regulation has run its course and is now harmful to consumer welfare, investment and market-based competition," Mr. Seidenberg said. "It's time to stop playing tomorrow's game with yesterday's equipment."

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