Competitors to Big Telcos Eyeing New Coalitions

Pickering first raised the idea of a competitive alliance at CompTel last fall, suggesting its membership should include Comcast, Sprint Nextel, Clearwire and Google, along with CompTel’s competitive local exchange carrier members. CompTel President Matt Salmon endorsed the idea soon after (CD Oct 31 p1). Pickering appeared more enthusiastic about a competitive coalition Wednesday. “The power of incumbents is very very strong,” Pickering said. Formation of a broad competitive coalition is “the only way to counterbalance that.”

Broadband stimulus efforts will create a common focal point for many telecom interests in the next 60-90 days, opening the door for new coalitions, Pickering said. “This would be an opportunity for us to find creative ways to partner,” agreed Charles McKee, Sprint Nextel government affairs director. Coalitions could be useful when the NTIA holds its rulemaking, said CompSouth President Susan Berlin.

Coalitions will also play a vital role in “deep-sixing” forbearance and revamping intercarrier compensation, among other efforts, said Salmon. Last year, CompTel formed an effective coalition with state regulators, cable companies, and mid-sized and rural carriers to punt a possible intercarrier compensation revamp, he noted. “You have to reach out because we are dealing with some of the most powerful forces in Washington, D.C.”

Coalitions could speed resolution of controversial issues, McKee said. One reason the FCC has had difficulty resolving intercarrier compensation, for example, is because there are so many different interests at play, he said. Forming alliances could help alleviate some of that complexity, he said. “The more we are able to resolve competing interests for” the FCC, “the easier we make their job, and the closer we will be to achieving actual reform.”

The pros of forming alliances outweigh the cons, said Robin Casey, a Texas attorney who has represented coalitions. Alliances offer strength in numbers, cost savings and information sharing. Coalitions fail when companies can’t resolve conflicts on issues and strategies, or don’t act as quickly as necessary, she said. To avoid problems, a coalition should establish rules upfront, and stay focused on its core goals, she said.

A coalition must keep narrow focus, said McKee. An alliance will fall apart if it lacks a core message that unites its members, he said. At the same time, coalitions should seek broad membership that includes states, local government entities and consumer groups, he said. That way, the coalition can say their plan serves not only what industry wants, but also the public interest, he said. -- Adam Bender

CompTel Notebook…

Deep packet inspection amounts to an invasion of privacy, said Ed Henigin, chief technology officer of Data Foundry, during a panel Tuesday at CompTel. “Maybe [network operators] should just get a key to my house and look through my filing cabinets while they're at it,” he said. Network operators have strong financial incentive to inspect packets, because it enables them to charge more for certain types of traffic, he said: For example, an operator could charge more for a Skype call, or charge Netflix a premium for better video streaming. But when an operator inspects packets, it could be looking at private information, possibly violating legal protections for trade secrets, tax records and financial records, among others, Henigin said. Operators should only be permitted to analyze data if the end user voluntarily opts in, and that choice shouldn’t be a mandatory condition of service, he said. Categorical rejection of deep packet inspection isn’t the answer, because it also has good uses, said John Heitmann, an attorney for competitive local exchange carriers. The government, for example, uses inspection to prevent cyber attacks, while operators use it to stop denial-of-service attacks, he said.

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Economic stimulus legislation is just what the doctor ordered for Massachusetts, said Sharon Gillett, head of the state’s Department of Telecom & Cable. Massachusetts plans to apply to the NTIA for broadband money, she said. The governor signed legislation in August designed to spur deployment in the underserved western part of the state, but the state had been counting on the private sector to supply a large portion of the funding, she said. Things looked grim after the economic meltdown, but Congress’ stimulus package should reanimate the state program, Gillett said. The stimulus package should be flexible enough to help states that aren’t as far along as hers on broadband planning, she said. The legislation doesn’t require states to apply, so municipalities with a better handle on local broadband needs won’t face red tape getting money, she noted. Gillett also talked briefly about revamping the FCC’s forbearance process. It would be “fantastic” if the commission involved states early in the process to build evidence about local market competition, she said. States collect a lot of competition data, but these resources frequently go untapped, she said. When the commission was mulling unbundling forbearance for Verizon in Boston, the FCC didn’t even permit the Massachusetts regulator to see the agency’s standard for judging competition, she said.