[Congressional Record (Bound Edition), Volume 149 (2003), Part 11]
[Extensions of Remarks]
[Page 14551]
[From the U.S. Government Publishing Office, www.gpo.gov]




              THE BENEFITS OF FACILITIES-BASED COMPETITION

                                 ______
                                 

                          HON. SILVESTRE REYES

                                of texas

                    in the house of representatives

                        Wednesday, June 11, 2003

  Mr. REYES. Mr. Speaker, there is little doubt that true head-to-head 
facilities-based competition benefits consumers. This is certainly true 
in the cable industry, where prices in areas where there are two 
facilities-based cable systems competing head-to-head are 17 percent 
lower than in areas where there is only one cable system.
  In the world of residential high-speed Internet access, facilities-
based competition is coming. Right now, cable dominates the market. 
Cable serves about two out of every three broadband consumers. One 
reason cable dominates the market is because cable broadband is 
essentially unregulated, where as broadband provided by telephone 
companies, called DSL, is regulated as if it were regular telephone 
service.
  The Federal Communications Commission is in the process of creating 
regulatory parity between the two competitors. I encourage the FCC to 
continue down this road towards regulatory parity among broadband 
providers. We are seeing the benefits of this deregulation already. For 
example, Verizon just announced a 40 percent price cut in the cost of 
their DSL product. Consumers will have a real choice between two 
distinct head-to-head competitors.
  In the regular telephone world, however, the FCC decided not to 
stimulate head-to-head facilities-based competition. Instead, the FCC 
left in place rules that permit a competitor to use the existing 
telephone network at a substantial discount, up to 55 percent. The 
problem with this is that it lacks a sufficient incentive for a 
competing telephone company to build any facilities because it costs 
less to use the existing network at these below-cost prices. Regulatory 
pricing arbitrage does not result in true competition. The FCC needs to 
stop making the incumbent telephone companies subsidize long distance 
carriers' entry into the local markets. If the long distance carriers 
want to use the incumbent's network, they should do so at a reasonable 
price, not one that shifts money from the local telephone company to 
the long distance carriers. This system cannot be maintained.
  The FCC should adopt rules that give incentives for long distance 
carriers and others to build their own infrastructure. Then, there will 
be true head-to-head facilities-based competition. Consumers will 
benefit with lower prices, better service and more choices.
  In addition, there are national security and safety benefits to 
multiple networks. If one network is knocked out, communications can be 
routed over the other network.
  I urge the FCC to adopt rules that ensure the existence of true, 
head-to-head facilities-based competition for all types of 
communications services, especially voice telephony and broadband.

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