Blogosphere Enjoys the Battle of the Policy Wonks

Lots of coverage about the Tauke / McSlarrow debate last week.

Let's understand exactly what happened here.  Briefly, the FCC found that Verizon was violating a critical provision in the Telecommunications Act of 1996 that prohibited phone companies from using their 100-year-old monopoly power to stifle competition in the long run.

How could Verizon do that? 

There is a very unique process that is required when a phone customer decides to switch carriers.  It's called porting the customer's number and it happens when the new carrier notifies the incumbent provider that the customer has decided to switch and the customer's number has to be transferred.   

Congress understood that that was a vulnerability in the plan to create competition in voice telephony.  Incumbents could transfer that information from the technical department to the retention group to induce customers to cancel their order with the new competitive phone company (like us).

Why should you care?  After all, isn't that making Verizon more competitive and giving the customer a better deal?  Yes, but only in the short term. 

Karl at BBR hit the nail on the head.

Tauke is largely speaking nonsense. Nothing in the order (released this morning) prohibits Verizon from marketing their offers to everyone under the sun, they just have to do it before a consumer chooses to switch.

And Paul at Sidecut Reports, declared a winner

In the talking typing heads policy battle currently raging across the blogosphere, I hereby declare the NCTA as winner.

But over at the Technology Liberation Front, they had a different point of view.

it’s hard for me to see how those old number portability regulations make sense if they limit the ability of incumbents to play hard-ball in an attempt to retain customers. After all, that’s what we should want more of in the marketplace: good ol’ fashion head-to-head, facilities-based competition….

I disagree with Technology Liberation Front.

This prohibition was written into the Act for a very good reason.  It was an essential part of creating competition for the long term.  Congress was concerned that an incumbent could offer new deals only to those who are already committed to leave them.  Why weren't they playing fair by marketing these same people before they leave?

Eventually, the new, competitive phone company finds that they only actually install a small percentage of their sales.  At some point, they find that they can't compete anymore and bingo!  The incumbent goes back to the good old days of the Ma Bell monopoly.