Qwest's local-loop dilemma

R emember Anne Bingaman? Bill Gates sure does. Bingaman is the former U.S. assistant attorney general who brought in the 1995 consent decree against Microsoft's marketing practices. That's the action that stands behind the government's accusations that Microsoft improperly bundles Windows 95 and Internet Explorer. Now through the magic of industry upheaval, Bingaman stands to play another major role in networking - as a key official at Qwest Communications International.

With its massive new OC-192 speed national network, Qwest is looking to take boatloads of enterprise business away from the big, entrenched carriers. Two years ago, Qwest's new merger partner, long-distance carrier LCI International, hired Bingaman to head its local division. The idea was to use Bingaman's influence and experience in industry and government circles to build LCI's local-exchange business. Voila! Now Bingaman stands in a position to complete the local loop between you and Qwest.

Perhaps you're thinking to yourself: Gee, LCI . . . I've heard of it as a long-distance company, and I've seen LCI's TV commercials promoting exact billing for residential telephony, but it has never knocked on my door as a competitive local exchange carrier.

Well, there's the rub. LCI owns only one local telephone switch. Instead of building its own local networks, LCI has attempted to resell lines from regional Bell operating companies. And like everyone else who tries this, Bingaman concedes that local resale is very tough sledding. In fact, LCI has really pursued the local market on the legal front.

Bingaman has filed petitions asking the Federal Communications Commission to go beyond even its current, controversial interconnection rules to establish performance criteria for RBOCs' electronic order-sharing systems. Bingaman also recently asked regulators to provide a mechanism to split the RBOCs into wholesale and retail companies to avoid conflicts of interest.

Protesting against the notion that LCI is pursuing a legal-only local strategy, Bingaman recently told me that LCI network engineers are examining options for a facilities-based entry. But she and LCI Chairman and CEO Brian Thompson reiterated that LCI is unwilling to post large local-network losses the way MCI has. "There's a lot that has to be sorted out before we jump in," Thompson said.

Indeed there is, but isn't it remarkable how the race seems to be going to those - such as WorldCom CEO Bernie Ebbers and Qwest's own president, former AT&T exec Joe Nacchio - who aren't waiting to sort things out? Qwest's entire business is based on owning its facilities, not lobbying the government for a good price to lease someone else's. Even if Bingaman wins her policy wars, it's going to take at least another year. Then the inevitable RBOC lawsuits will delay things even more.

It would be neat to be in the room when Nacchio, Thompson and Bingaman decide whether the new Qwest will be a real local carrier after all. If I were there, I'd remind them that someone else with an end-to-end story is out there signing up a dozen of their prospects to long-term contracts. Maybe then they'll decide what Nacchio already knows: Users buy bandwidth, not telecom policy.