- The Washington Times - Monday, February 24, 2003

WASHINGTON, Feb. 24 (UPI) — The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks. This is the third of three wrap-ups for February 24.

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The Cascade Policy Institute

(CPI is a libertarian nonprofit research and educational organization that focuses on local and state level issues in Oregon. The Institute's mission is to explore and advance public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity.)

PORTLAND, Ore. — Options increase in local phone markets

By James Gattuso, J.D.

Like a snail in a sprint, the Federal Communications Commission is rushing toward a decision on its local competition rules. FCC chairman Michael K. Powell announced at the end of January that he expects the commission to meet its Feb. 20 court deadline for its revised rules, in fact to beat it by a week.

That's welcome news. How much reform there will be is still a question mark.

The mere prospect of action has sparked howls of protest from defenders of the regulatory status quo. Their message has been simple: competition to Qwest and other "Bell monopolies" is weak and uncertain, with challengers rocked by failure. Loosening the rules now would mean the death knell for the competition hoped for from 1996 reforms.

It's a nice clean storyline, and sure to be all over the media, no matter how timid the final FCC decision is. But, as shown in statistics just released by the FCC, competition hasn't been a failure. It's actually doing pretty well, although the greatest competition has come from a source not contemplated in 1996: cell phones.

Of course, this doesn't mean the last few years have been good to investors in competitive carriers. From a high of some $86 billion, the capitalization of competitive providers, or "CLECs" was down to $4 billion at last count, and the number of CLECs has diminished from some 300 to less than 100.

Despite these numbers, telecom competition is hardly on the rocks. In fact, according to the latest report by FCC number crunchers, there's more competition in local telephony than ever before. Nationally, they found that CLECs held 11.4 percent of all telephone access lines. That's a 10 percent increase over the beginning of 2002, and a 26 percent jump over a year earlier.

In Oregon, CLECs served over 154,000 customer lines, seven percent of the total, up a whopping 40 percent from the previous year. In all, Oregonians in half of the state's zip codes had the option of choosing their own telephone company.

These numbers, however, tell only part of the story, and not even the most important part: the phenomenal growth of competition from cell phones and other mobile wireless providers. Once a purely supplementary telephone service — too expensive to use regularly — the price of wireless phone service, combined with its functionality, is making it a prime substitute for old-fashioned wireline service.

The number of subscribers is vast, 129 million, compared to 167 million lines served by traditional wireline carriers. There are nearly 1.5 million wireless phone subscribers in Oregon, compared to about 2 million for Qwest and other traditional providers. Of course, not all of these use their wireless phone as a substitute, but an awful lot do. A smallish but significant number — 6.5 million nationally — don't even have a wired phone. More telling, about one in six (18 percent) consider their wireless phone their primary phone.

Ironically, the authors of the 1996 act did not contemplate the competitive challenge of wireless — that legislation barely referenced mobile wireless services at all. And the technology hardly figured in the seven-year drama of regulation and litigation over competition rules that have followed. Instead, after the initial assignment of spectrum, regulators in Washington and Salem have largely left the industry alone.

Despite, or perhaps because of, this neglect consumers have been rewarded with a competitive success story. So, if things are going well, why should the commissioners change the current rules?

First, though wireless competition is largely facilities-based, the same cannot be said about the CLECs, which use their own local loops for less than 30 percent of their lines. In Oregon, the number is closer to 20 percent. Real, facilities based, competition is the goal, and as several judges have hinted, it is discouraged by the current rules. Why build your own facilities when you can just lease someone else's, at prices set by regulators?

The second reason FCC commissioners should change the rules has nothing to do with voice competition: the damage done to broadband and other new technologies by discouraging investment could dwarf the consequences in the traditional telephone market. It is for these new technologies of the 21st Century, rather than the old ones of the 20th, that reform is most needed.

(James L. Gattuso, J.D., is an adjunct scholar with Cascade Policy Institute, and a research fellow in regulatory policy at the Heritage Foundation.)

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The Heritage Foundation

WASHINGTON — Time is now for federal grand jury reform

By Paul Rosenzweig

Imagine you own a company that sells televisions imported from Japan. A federal prosecutor is trying to convince a grand jury to charge you with misrepresenting what you paid for your TVs to avoid dumping accusations. He calls the chief executive officer of one of your competitors to the stand and lets him wax poetic about the quality of American workmanship and your distinct lack of patriotism. He mysteriously fails to present evidence that favors you.

Naturally, the grand jury indicts.

Or imagine you sell some oil leases improperly. You discover and report your own infractions, and the government says it won't prosecute you if you pay back everyone you defrauded. You repay the investors, and the prosecutor uses the information you volunteered to win an indictment.

Can't happen? In fact, both cases are real. In too many cases, prosecutors have gone from using federal grand juries for their original purposes — to sift out weak cases and to protect the accused from overaggressive police and prosecutors — to manipulating them by presenting misleading or inadmissible evidence and withholding evidence that favors defendants.

In an effort to curb this increased propensity for cutting corners to win indictments, the National Association of Criminal Defense Lawyers' Commission to Reform the Federal Grand Jury has developed a Federal Grand Jury Bill of Rights. The commission, which included such law luminaries as Anton Valukas, a U.S. Attorney during the Reagan administration, and Larry D. Thompson, now the number two man in the Justice Department, recommended 10 reforms designed to return the federal grand jury to its proper role. Not all are workable, but many would help the system operate more efficiently by exposing — and dismissing — weak cases.

Among the reforms:

— No prosecutor shall knowingly fail to disclose to the federal grand jury evidence that exonerates the target or subject of the offense. In other words, if evidence suggests the subject is innocent, move on.

— The prosecutor shall not present to the federal grand jury evidence that he or she knows to be constitutionally inadmissible at trial. Although illegally seized evidence is admissible to the grand jury, why should a prosecutor try to use such evidence to win an indictment when he knows he can't use it to convict at trial?

— A target or subject of a grand jury investigation should have the right to testify before the grand jury. If the targets of a grand jury investigation want to explain their actions, prosecutors should let them. The explanation may end the prosecution … or expedite it.

— Federal grand juries shall no longer name unidicted co-conspirators in a criminal conspiracy. If prosecutors can't hope to convict someone, why disparage him? Why not simply mention the name during the trial, if necessary?

— All subjects or targets who don't receive immunity for their testimony before a grand jury should be given Miranda warnings before being questioned. Prosecutors routinely tell witnesses that they are not a target of an investigation to get them to answer questions, only to later use their answers to charge them.

— All subpoenas for witnesses called before the federal grand jury shall be issued at least 72 hours before the appearance, not to include weekends and holidays, except for emergencies. These eleventh-hour subpoenas, which help prosecutors essentially mug unprepared witnesses, don't constitute fair play.

— Federal grand jurors shall receive meaningful jury instructions, and defendants should have the right to copies of the instructions after indictment. If people are guilty, tricks aren't necessary; they're shortcuts that shouldn't be taken.

The commission also suggested witnesses be allowed to bring their attorneys and obtain transcripts of their testimony. While these sound like good ideas, they can be dangerous, especially with Mafia and other gang defendants. Often, in these cases, the attorney is there to make sure the witness doesn't give up gang secrets, which has, of course, a chilling effect on testimony. Same goes for transcripts. Witnesses sometimes need some deniability about their testimony.

Running the justice system is more challenging than ever, thanks to Sept. 11 and the ongoing terrorist threat. That's why it's more — not less — important now than ever before that the grand jury function properly.

(Paul Rosenzweig is a senior legal research fellow in the Center for Legal and Judicial Studies at the Heritage Foundation, and an adjunct professor of law at George Mason University.)


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