- Email: [email protected]
Regulatory update
~
Telecommunications Policy, Vol. 20, No. 2, pp. 159--160, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain. All fights reserved 0308-5961/96 $15.00 + 0.00
Pergamon
Regulatory update AT&T announces massive restructuring In September 1995, citing changes in markets, public policy and technologies, AT&T announced that it was splitting itself into three separate publicly traded companies, namely a communication services company, a communication hardware company and a computer systems company. It hopes to complete restructuring by the end of 1996. The communications services company will continue to operate under the AT&T name and will provide local, long-distance, wireless, credit card, consulting and systems integration. The hardware company will continue to manufacture telecom equipment and computer chips. The third company, currently known as Global Information Solutions (formerly NCR Corp), will be cut in size, losing 20% of its current workforce of 43 000 due to personal computers being dropped from its product line. This break-up is predicted to spark a fresh round of mergers and alliances among regional Bell companies and long-distance carriers as they find themselves in competition with a more focused AT&T. declared non-dominant: in October 1995, the FCC voted to reclassify AT&T as a 'non-dominant' carrier, subsequently to discovering that it lacks market power in the interstate inter-exchange telecoms services market and that the current 'dominant carrier' regulation hinders AT&T's ability to introduce new services and
AT&T
The information contained in this section draws on publications prepared by Bell Canada's Regulatory Research Group. For information on the source publication, Regulatory Trends, please contact Charles Gravelle, Director, Regulatory Research, 105 rue H6tel-de-ville, 6i~me 6tage, Hull, Quebec, Canada J8X 4H7 (Tel: +1 819 773 5882; fax: +1 819 770 1666).
respond quickly to competitors' new discount plans. The ruling means that AT&T will be regulated like its longdistance competitors, in that it will no longer be subject to price cap regulation, and its tariff filings will be presumed lawful on one day's notice and will require no cost support. However, the FCC did take up AT&T's voluntary commitment to offer, for three years, special calling plans targeted to low-income and low-volume customers. A T & T sets sights on local market:
A T & T Chief Executive Robert E Allen confirmed in October 1995 that his company has definite plans for a nationwide assault on US local service markets. Currently AT&T has local entry applications pending in Illinois, Michigan, California and Connecticut, and some analysts predict that AT&T could account for a 30% local market share across the country within three to five years. Earlier in 1995, AT&T began offering local services, through resale, in Rochester, New York, but has since stopped promoting its service offering due to disagreements with Rochester Tel, the incumbent telco, on the appropriate wholesale rate for resale.
NTT announces
restructuring plans Japan's Nippon Telegraph & Telephone announced in November 1995 it will reduce its current workforce of nearly 200 000 by about 50 000 over the next five years through attrition, early retirement and transfers to affiliated companies. The company has already cut its head count by 100 000 since its partial privatization in 1985. Included in the NTT restructuring is a plan to reorganize and spin off its communications system, communication software, equipment sales and switching system maintenance divisions into separate companies. Industry observers see the announced restructuring as a part of NTT's ongoing efforts to stave off an AT&T-style divestiture of its local and longdistance operations. In related news, it was reported that the German national carrier Deutsche Telekom has won labour union approval for its plan to cut 60 000 jobs by agreeing to postpone any layoffs until after 1997. Telekom currently employs about 230 000 people. The carrier is to be partially privatized next year and will see all its markets opened to competitive entry by January 1998.
WTO: local markets to benefit from competition Senior representatives from 42 countries, meeting under the auspices of the World Trade Organization, agreed to lay down plans early this year for the opening of national telecom markets to international competition. While there are few countries involved in the negotiations that are now ready 159
to open their markets to outsiders, the European Union (EU) plans to offer non-EU countries the same access to competitive public network and public switched service markets as will be guaranteed in EU countries, beginning in January 1998. According to negotiators from the US and the EU,
Regulatory update the two major players, monopoly companies in other countries, both industrialized and developing, must open up their markets to increase efficiency, notwithstanding their fears that big companies will come in to take over their national firms or staterun bodies. Rather, since service providers cannot afford to build in every market, it is expected there will be a combination of partnerships, alliances and reseller agreements in every country.
FCC promotes further LEC price cap rule changes The US federal telecommunications regulator is proposing changes to its local exchange carder (LEC) price cap rules to reflect and encourage emerging competition in local exchange and exchange access services markets and to establish a 'glide path' towards deregulation of these services. The proposed new rules would give LECs increased flexibility to reduce prices and offer discounts for their access services. Under the new rules, the lower band limit on price reductions within service categories would be eliminated immediately. The FCC also proposed to replace its current system for obtaining waivers of its access rules in order to introduce new switched services, replacing that system with a more streamlined process that would enable new services to be rolled out much more rapidly. The FCC also called for comment on whether any or all of its proposals for relaxed regulatory treatment and additional pricing flexibility should be conditioned on a demonstration that barriers to entry into an LEC's local exchange market have been removed, and if so, what showing would be required.
Privacy laws found wanting A study carried out by the US Com-
160
merce Department's National Telecommunications and I n f o r m a t i o n Administration (NTIA) reports that disparate privacy laws cover telephony and video services, and communication via the Internet is 'almost entirely unprotected'. According to the study, entitled Privacy and the National In-
formation Infrastructure: Safeguarding Telecommunications-Related Personal Information, problems will escalate unless a uniform policy standard is adopted to protect the use of personal information as the telephony, video and computer communications services sectors continue to converge and as new technologies evolve. The report cautions that, without some remedial action, the lack of privacy protections could limit consumer use of the Information Superhighway. And while N T I A stops short of calling for legislation to remedy the situation, it does warn that 'if industry selfregulation does not produce adequate notice and customer consent procedures, government action will be needed to safeguard the legitimate privacy interests of American consumers'.
'Demerger' proposal floated for BT The UK investment bank UBS has recommended that British Telecom consider a partial 'demerger' of its networks business as a means of realizing 'hidden value' in its share price and possibly gaining some regulatory relief. UBS says that BT's n e t w o r k business, which it calls 'UKnet', should be run as a utility, while the services side of BT, referred to as 'new BT', would become a retailer of services delivered over UKnet. UBS argues that a restructuring of the networks business into a separate company with its own board and some independent shareholders would allow BT to argue that it was in the same position as any other service provider using UKnet, and that this might be enough to persuade the UK regulator to scale back regulation of BT. The proposal is not dissimilar to the Open Market Plan implemented by Rochester Tel in New York.
New Zealand avoids price controls EC commissioner approves Atlas alliance Karel van Miert, the European Commission's competition commissioner, reached a tentative agreement in October 1995 with state-owned France Telecom and Deutsche Telekom and their governments on the carriers' proposed Atlas alliance to jointly market telecom services across Europe. The agreement was made possible when France and Germany agreed to allow alternative network operators to offer already liberalized services over their own networks starting in July of this year. EC and FCC approval for the two European carriers to take a 20% stake in Sprint for US$4 billion, and for the carriers to then form a global telecommunications alliance, Phoenix, remains outstanding.
It is reported that New Zealand's top two carriers, Telecom New Zealand and Clear Communicatons, have finally ended their five-year local interconnection dispute. The a g r e e m e n t reached between the two parties is said to settle all existing legal claims. Included in the agreement is a dispute resolution mechanism under which either party may seek compulsory arbitration on two months notice, with the arbitration process itself being limited to no more than six months. While there is no industry-specific regulator in New Zealand, the government recently threatened to impose price controls over local network interconnection arrangements if the two parties did not come to terms. Clear says it will now be able to offer local services to residential customers in Auckland and Wellington by the end of this year.
Telecommunications Policy, Vol. 20, No. 2, pp. 159--160, 1996 Copyright © 1996 Elsevier Science Ltd Printed in Great Britain. All fights reserved 0308-5961/96 $15.00 + 0.00
Pergamon
Regulatory update AT&T announces massive restructuring In September 1995, citing changes in markets, public policy and technologies, AT&T announced that it was splitting itself into three separate publicly traded companies, namely a communication services company, a communication hardware company and a computer systems company. It hopes to complete restructuring by the end of 1996. The communications services company will continue to operate under the AT&T name and will provide local, long-distance, wireless, credit card, consulting and systems integration. The hardware company will continue to manufacture telecom equipment and computer chips. The third company, currently known as Global Information Solutions (formerly NCR Corp), will be cut in size, losing 20% of its current workforce of 43 000 due to personal computers being dropped from its product line. This break-up is predicted to spark a fresh round of mergers and alliances among regional Bell companies and long-distance carriers as they find themselves in competition with a more focused AT&T. declared non-dominant: in October 1995, the FCC voted to reclassify AT&T as a 'non-dominant' carrier, subsequently to discovering that it lacks market power in the interstate inter-exchange telecoms services market and that the current 'dominant carrier' regulation hinders AT&T's ability to introduce new services and
AT&T
The information contained in this section draws on publications prepared by Bell Canada's Regulatory Research Group. For information on the source publication, Regulatory Trends, please contact Charles Gravelle, Director, Regulatory Research, 105 rue H6tel-de-ville, 6i~me 6tage, Hull, Quebec, Canada J8X 4H7 (Tel: +1 819 773 5882; fax: +1 819 770 1666).
respond quickly to competitors' new discount plans. The ruling means that AT&T will be regulated like its longdistance competitors, in that it will no longer be subject to price cap regulation, and its tariff filings will be presumed lawful on one day's notice and will require no cost support. However, the FCC did take up AT&T's voluntary commitment to offer, for three years, special calling plans targeted to low-income and low-volume customers. A T & T sets sights on local market:
A T & T Chief Executive Robert E Allen confirmed in October 1995 that his company has definite plans for a nationwide assault on US local service markets. Currently AT&T has local entry applications pending in Illinois, Michigan, California and Connecticut, and some analysts predict that AT&T could account for a 30% local market share across the country within three to five years. Earlier in 1995, AT&T began offering local services, through resale, in Rochester, New York, but has since stopped promoting its service offering due to disagreements with Rochester Tel, the incumbent telco, on the appropriate wholesale rate for resale.
NTT announces
restructuring plans Japan's Nippon Telegraph & Telephone announced in November 1995 it will reduce its current workforce of nearly 200 000 by about 50 000 over the next five years through attrition, early retirement and transfers to affiliated companies. The company has already cut its head count by 100 000 since its partial privatization in 1985. Included in the NTT restructuring is a plan to reorganize and spin off its communications system, communication software, equipment sales and switching system maintenance divisions into separate companies. Industry observers see the announced restructuring as a part of NTT's ongoing efforts to stave off an AT&T-style divestiture of its local and longdistance operations. In related news, it was reported that the German national carrier Deutsche Telekom has won labour union approval for its plan to cut 60 000 jobs by agreeing to postpone any layoffs until after 1997. Telekom currently employs about 230 000 people. The carrier is to be partially privatized next year and will see all its markets opened to competitive entry by January 1998.
WTO: local markets to benefit from competition Senior representatives from 42 countries, meeting under the auspices of the World Trade Organization, agreed to lay down plans early this year for the opening of national telecom markets to international competition. While there are few countries involved in the negotiations that are now ready 159
to open their markets to outsiders, the European Union (EU) plans to offer non-EU countries the same access to competitive public network and public switched service markets as will be guaranteed in EU countries, beginning in January 1998. According to negotiators from the US and the EU,
Regulatory update the two major players, monopoly companies in other countries, both industrialized and developing, must open up their markets to increase efficiency, notwithstanding their fears that big companies will come in to take over their national firms or staterun bodies. Rather, since service providers cannot afford to build in every market, it is expected there will be a combination of partnerships, alliances and reseller agreements in every country.
FCC promotes further LEC price cap rule changes The US federal telecommunications regulator is proposing changes to its local exchange carder (LEC) price cap rules to reflect and encourage emerging competition in local exchange and exchange access services markets and to establish a 'glide path' towards deregulation of these services. The proposed new rules would give LECs increased flexibility to reduce prices and offer discounts for their access services. Under the new rules, the lower band limit on price reductions within service categories would be eliminated immediately. The FCC also proposed to replace its current system for obtaining waivers of its access rules in order to introduce new switched services, replacing that system with a more streamlined process that would enable new services to be rolled out much more rapidly. The FCC also called for comment on whether any or all of its proposals for relaxed regulatory treatment and additional pricing flexibility should be conditioned on a demonstration that barriers to entry into an LEC's local exchange market have been removed, and if so, what showing would be required.
Privacy laws found wanting A study carried out by the US Com-
160
merce Department's National Telecommunications and I n f o r m a t i o n Administration (NTIA) reports that disparate privacy laws cover telephony and video services, and communication via the Internet is 'almost entirely unprotected'. According to the study, entitled Privacy and the National In-
formation Infrastructure: Safeguarding Telecommunications-Related Personal Information, problems will escalate unless a uniform policy standard is adopted to protect the use of personal information as the telephony, video and computer communications services sectors continue to converge and as new technologies evolve. The report cautions that, without some remedial action, the lack of privacy protections could limit consumer use of the Information Superhighway. And while N T I A stops short of calling for legislation to remedy the situation, it does warn that 'if industry selfregulation does not produce adequate notice and customer consent procedures, government action will be needed to safeguard the legitimate privacy interests of American consumers'.
'Demerger' proposal floated for BT The UK investment bank UBS has recommended that British Telecom consider a partial 'demerger' of its networks business as a means of realizing 'hidden value' in its share price and possibly gaining some regulatory relief. UBS says that BT's n e t w o r k business, which it calls 'UKnet', should be run as a utility, while the services side of BT, referred to as 'new BT', would become a retailer of services delivered over UKnet. UBS argues that a restructuring of the networks business into a separate company with its own board and some independent shareholders would allow BT to argue that it was in the same position as any other service provider using UKnet, and that this might be enough to persuade the UK regulator to scale back regulation of BT. The proposal is not dissimilar to the Open Market Plan implemented by Rochester Tel in New York.
New Zealand avoids price controls EC commissioner approves Atlas alliance Karel van Miert, the European Commission's competition commissioner, reached a tentative agreement in October 1995 with state-owned France Telecom and Deutsche Telekom and their governments on the carriers' proposed Atlas alliance to jointly market telecom services across Europe. The agreement was made possible when France and Germany agreed to allow alternative network operators to offer already liberalized services over their own networks starting in July of this year. EC and FCC approval for the two European carriers to take a 20% stake in Sprint for US$4 billion, and for the carriers to then form a global telecommunications alliance, Phoenix, remains outstanding.
It is reported that New Zealand's top two carriers, Telecom New Zealand and Clear Communicatons, have finally ended their five-year local interconnection dispute. The a g r e e m e n t reached between the two parties is said to settle all existing legal claims. Included in the agreement is a dispute resolution mechanism under which either party may seek compulsory arbitration on two months notice, with the arbitration process itself being limited to no more than six months. While there is no industry-specific regulator in New Zealand, the government recently threatened to impose price controls over local network interconnection arrangements if the two parties did not come to terms. Clear says it will now be able to offer local services to residential customers in Auckland and Wellington by the end of this year.