Contact: Bruce Kushnick or Miranda Berner
FOR IMMEDIATE RELEASE: August 2nd, 2001.
TO READ OUR REPORT SEE:
New York --- New Networks Institute (NNI) today released a "Special Report" titled: "The Bells Harmed The CLEC (Competitive Local Phone Company) Industry", supplying evidence that the Bell companies' anti-competitive behavior and lack of enforcement has been the major impediment for competitors to offer local phone and DSL/Broadband services, not the CLECs' business plans as some would suggest.
A recent report titled "An Assessment Of The Competitive Local Exchange Carriers Five Years After The Passage Of The Telecommunications Act " written by Robert Crandall, Senior Fellow at the Brookings Institute and funded by the USTA (United States Telephone Association, which represents the Bell companies) concluded that the collapse of the CLEC market was caused primarily by their own mistakes and not caused by the Bell companies treatment of competitors. We believe Dr. Crandall's conclusion unwarranted and his analysis flawed by his decision to ignore an ample body of evidence to the contrary.
Dr. Crandall's report reviews each of the many explanations for CLEC failure prevalent today in discussions of the industry's troubles. To read the Report and USTA releases: http://www.usta.org/crandall_media_kit.html He notes that:
"Some observers have attributed the recent poor performance of the CLECs to the actions of the incumbent local carriers without providing any evidence that these inter-carrier relationships are the principal problem for the new entrants" (9) (page 10)
First, there is a litany of evidence that shows that the phone networks are not open today to competitors, and therefore stifles their ability to compete, grow, or just stay in business.
Some of the examples in the report:
Secondly, there is a serious flaw in Crandall's analysis of CLEC complaints. He notes that the number of the formal complaints represents only 1-2 percent of the total number of market-opening commercial arrangements the CLECs have negotiated with the Bells. He concludes that Bell bad acts were too few in number to explain the widespread distress of the CLEC industry.
Unfortunately, though he identifies 10,432 agreements and only 126 formal complaints --- therefore 1%, he misses that there are approximately 275 CLECs. Therefore, on average, almost half of all CLECs have filed formal complaints---a very high number. He also ignores the fact that CLECs and their customers have filed thousands of informal complaints with the state commissions, the FCC, have taken numerous lawsuits --- volumes of data.
"Complaints are continuous and daily, not rare as the author would like the reader to believe. It is the fundamental problem for the entire industry and the cause of the CLEC industry being on life support today," states Bruce Kushnick, executive director, New Networks Institute.
Finally, the Crandall report doesn't reflect the views of the CLEC industry. Crandall identifies three CLECs that are successful --- Time Warner Telecom, McLeod USA and Allegiance Telecom. However, it appears that Crandall never interviewed these companies. So it is ironic that within weeks of the release of the report, CEOs from McLeod and Allegiance gave testimony in front of Congressional Committees that the Bells were the primary cause of problems in the industry, delivering substandard customer services or harm in a myriad of ways. For example, Royce Holland, CEO of Allegiance testified that there has been a "systematic attempt to thwart sales efforts" -- on a customer-by-customer attack. http://energycommerce.house.gov/107/hearings/05172001Hearing222/Holland339.htm
"Phase one of competition is over. The industry is on life-support and it was mainly caused by the Bell's monopoly practices, not the CLECs' business plans" added Kushnick.
For more information, please call Bruce Kushnick or Miranda Berner at 212-777-5418.