Verizon Admits It's Holding Fiber Lines Hostage Until Regulations Change

from the how-badly-does-the-FCC-want-fiber? dept

We've mentioned in the past Verizon's overhyped fiber claims (many of which have been going on for years). One element was that Verizon was using its clout as the only company likely to install fiber optic lines to try to get government regulations changed in their favor. The example mentioned was that they were upset about state regulations in New Jersey. Well, now the company has admitted that they're willing to hold out on fiber optic lines for the entire northeast thanks to federal regulations. The problem, specifically, is because Verizon was made from the merger of NYNEX, Bell Atlantic and GTE. NYNEX and Bell Atlantic were Baby Bells and required to share lines (see the post below this one) while GTE wasn't. So, they're claiming they won't build out fiber until the FCC backs down and guarantees they won't be required to share those fiber lines at regulated prices. Now, it's easy to see both sides of this story, but you can make the argument that it's a bit odd that there's only one company that is willing to provide such a valuable offering, and they won't do it unless the government changes the rules. That certainly sounds like a market failure -- and it's exactly the type of market failure some economists have an answer for. If fiber is a "natural monopoly" product, why not view it like the highway system: get it built, and then open it up to everyone. Either way, this seems like pure posturing from Verizon. Later in the article Verizon's president admits that fiber is going to be the "turning point for our own businesses." If they realize it's so valuable, you would think they would see the benefits as being much more valuable than the risk of having to share the lines.
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  • identicon
    Anonymous Coward, 25 Aug 2004 @ 4:14am

    Monopoly

    Now, it's easy to see both sides of this story, but you can make the argument that it's a bit odd that there's only one company that is willing to provide such a valuable offering, and they won't do it unless the government changes the rules.
    In most cases, the local incumbent phone company isn't the only one willing, they're the only one even allowed to install phone lines in the utility easements. This is the monopoly that makes them lots of money and keeps us from getting fiber unless it is on their terms.

    reply to this | link to this | view in chronology ]


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