Telecom lawyers on the prowl after release of FCC review

You have to be very concerned about the future health of our industry when you read quotes like the following, pulled from a recent article in The New York Times: “Every word will be challenged,” said Dana Frix, a telecommunications lawyer with Chadbourne & Parke. “My children will go to college on this stuff. This is a lawyer’s dream.”

The first thing we do, let’s kill all the lawyers.William Shakespeare, from King Henry the Sixth, Part II

Dear Vorticians,

Now, I’m hardly advocating euthanasia for members of the legal profession. Heck, some of my best friends – and not a few of my fellow Vorticians – studied (and some practice) the legal craft. And the irony of a journalist pointing a finger at lawyers is not lost on me. I’ll freely admit we occupy a position somewhere below attorneys on the list of most loved professions.

But you have to be very concerned about the future health of our industry when you read quotes like the following, pulled from a recent article in The New York Times: “Every word will be challenged,” said Dana Frix, a telecommunications lawyer with Chadbourne & Parke. “My children will go to college on this stuff. This is a lawyer’s dream.”

Frix, who is said to represent rivals to the Bell telephone companies, is, of course, referring to the Federal Communications Commission’s long-awaited Triennial Review, a nearly 600-page document that will guide at least the near-term future of telecom. It will put lots of lawyers’ children through college, post-graduate and, very likely, doctoral studies as well, not to mention enriching high-end automobile dealers fortunate enough to be situated around the offices of the nation’s leading telecom law firms.

The document spells out the intricate details of the basic ideas the FCC pronounced back in the spring, when FCC Chairman Michael Powell found himself on the wrong side of a coup engineered by Commissioner Kevin Martin. The best that can be said about the Triennial Review is that it has been met with unanimous industry reaction – no one likes it, not even Chairman Powell! And you can expect virtually every sector of the telecom industry to challenge some portion of it in court.

The Bells hate that they’ll still have to share their voice infrastructure with rivals, but now under guidelines that give the 50 states lots of leeway in deciding where competition exists and doesn’t. That scares the Bell rivals, who need the Bell facilities to compete. They’re also mad because the Bells won’t have to share future investments in fiber plants with them.

Hoo boy!

Three years into a disaster caused by the economy and the painful, unintended consequences of earlier major regulatory and legislative moves, the telecom industry now faces years of legal challenges and confusion thanks to the new rules. If this were just a boondoggle for lawyers and lobbyists, one could shake one’s head in wonder and/or disgust and move on.

But this is not simply legal and regulatory gobbledygook. This confusion, litigation and wrangling poisons the well for investors and will choke off the capital needed to revive the industry. The financial community hates uncertainty, indecision and delay. Investors will put their money into other sectors and the revival of telecom – as well as the whole U.S. economy – will be slowed.

This affects virtually every company in high-tech – hardware and software companies, customers, you name it. The one exception: cable companies, who enjoy a separate regulatory status. The confusion will delay the rollout of new services and of the

mergers and acquisitions that could bring some new competitiveness to the telecom sector.

In short, it’s a mess. The U.S. desperately needs a clear telecom policy designed to foster the development of a vibrant broadband services market. I despair for that policy.

If you’ve got ideas about how we could get to one, let me know at jgallant@vortex.net.

Thanks, and bye for now.