- The Washington Times - Tuesday, February 5, 2002

Lawmakers are increasingly eager to regulate the technology industry, according to a new report published yesterday by the libertarian Cato Institute.
"We see Washington becoming very comfortable with being meddlesome," said Adam Thierer, director of telecommunications studies at Cato, a District think tank.
The Cato Institute drafted a list of what it believes represent the 12 worst examples of technology policy. The group is using the list called the "Digital Dirty Dozen" to warn Congress that it is in jeopardy of saddling the technology industry with unnecessary regulations. The willingness of Congress to introduce bills to regulate the technology industry represents a significant change in the laissez-faire approach it took to the Internet just a few years ago.
Fearful that burdensome laws would stall an industry that helped drive the nation's economic growth, Congress has been slow to endorse technology legislation. A moratorium on Internet taxes was extended last year.
The Cato study says the worst example of bad technology policy is a bill introduced by Sen. Ernest "Fritz" Hollings, South Carolina Democrat, that could force the breakup of the regional Bell operating companies. The bill would require the Baby Bells to separate their wholesale businesses [the arm operating the infrastructure of wires and switches] from their retail operations [the arm marketing calling services] to promote competition.
According to the Cato study, so-called structural separation would be difficult to achieve, would not spur competition in local calling, could harm the Baby Bells Verizon Communications Inc., BellSouth Corp., SBC Communications Inc. and Qwest Communications International Inc. and damage the economy.
Competition has failed to emerge in the market for local calling services, and the Baby Bells have more than 90 percent of that market even though Bell competitors can latch onto the telecommunications network.
Instead of forcing the Bells to open their networks to competitors, Congress should force Bell competitors to build their own networks, the study says.
"Sharing isn't competing," Mr. Thierer said.
But forcing structural separation will help consumers and Bell competitors by ensuring that the Bells open their networks, said H. Russell Frisby Jr., president of the Competitive Telecommunications Association, a District group representing competitive local exchange carriers. The market-opening provisions of the Telecommunications Act of 1996 are too weak to force that change because it is too hard to convince a monopolist to relinquish its monopoly, the CTA says.
In addition, structural separation has worked in other industries, including the energy markets, and it can work in telecommunications, Mr. Frisby said.
The Cato Institute attacked two other telecommunications bills: a measure sponsored by Rep. Chris Cannon, Utah Republican, and a bill sponsored by Rep. John Conyers, Michigan Democrat, both of which would allow greater antitrust oversight of the Bell operating companies. One would forbid the Bells from offering long-distance phone service if they have 85 percent or more of the local-calling market. The other would allow greater antitrust enforcement against the Bells if they fail to live up to the Telecommunications Act.
Both bills are attempts to influence the debate surrounding another controversial measure sponsored by Rep. Billy Tauzin, Louisiana Republican, and Rep. John Dingell, Michigan Democrat, Mr. Thierer said.
The Tauzin-Dingell bill would let the Bells stop leasing lines and equipment to competitors.

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