Don Lively's Divestiture Essay and More - "Telecom Treason"
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Don Lively's Divestiture Essay and More
"Telecom Treason"





Let’s Have The Wall Street Journal Get it Straight

           Recent Journal stories about the FCC Triennial Review of the “Telecom Act of 1996”, continue to miss the ongoing significance of the near treasonous action of that Commission and of the Dept. of Justice - beginning in 1956 and culminating in the 1982 Modified Final Judgment (Consent Decree) which broke up the Bell System.

Destroying An Irreplaceable National Treasure

           The word “treason” is not used lightly. Ethel and Julius Rosenberg were executed in 1953 for their role in providing nuclear bomb details to the old Soviet Union - a disastrous compromise of America’s then edge in military capabilities. The Federal Government’s unceasing efforts to dismember the highly integrated Bell System, aside from the long period over which these efforts persisted, have had much the same effect as the Rosenberg’s transgressions. That is, with a stroke of a judicial pen, and as an immediate consequence of Divestiture, the once famous Research & Systems Engineering division of Bell Laboratories (RS&E), ceased to exist.  

That part of Bell Labs was the section which engaged in basic research, and was funded by a few pennies from each telephone user’s bill (via AT&T’s license contract with the Bell Operating Companies). This, as opposed to that part of BTL funded by Western Electric for product development. The RS&E organization engaged in the same sort of basic research which major universities pursued - it, once being judged second only to UC Berkeley in world stature.  

From there came the science that gave the world the transistor, laser (maser), Shannon’s Information Theory (basis of modern computing), fiber optics, cellular radio, satellite communications, radio broadcasting, sound motion pictures, a major role in the 70% of WWII military electronics which BTL and Western Electric provided - all these, and an endless series of “human factors” discoveries. Tragically, and as a recent commentator in the monthly journal of the Institute of Electrical and Electronic Engineers (IEEE) wrote, “none of the winning applications of the past decade have come from the telephone companies”. This, in contrast where virtually all once emerged.

Blocking Progress

All this is just part of the story. The Washington social meddlers, who seem genetically incapable of tolerating anything large and successful in the fields of privately funded and marketed technology or services, halted at the last moment, in the early 1960s, what would have been Americas first public dial up data network. A nationwide network of switches and digital transport facilities was built, tested and ready for service, when the FCC decided this offering would spell the competitive end of the already irrelevant Western Union Telegraph message service. Only about a quarter of a century later, with modem-equipped personal computers, did the public gain easy access to dialup data service. 

FCC road blocking of Bell progress didn’t stop in the ‘60s. Cellular radio was developed at BTL and was ready for the market in the early ‘70s. But again, the FCC was terrified that the Bell System might extend the range of telecom services it could offer. Not until the early ‘80s, was Bell allowed to provide this greatly improved advancement (cellular) over its long obsolete public mobile radio services. Of course, the Japanese, Swedes, Finns and others, had 10 years of no American competition in developing and marketing and cellular products and services for the rest of the world to profit from.

The Beat Goes On - 4th Amendment “Takings”

But, still the FCC’s beat goes on.  With its confusion about the market place and legitimate competition, the communications industry was given the “Telecommunications Act of 1996”. This latest piece of bureaucratic pettifogging, was supposed to bring about “real competition” in telecommunications. It’s policy for accomplishing this, was creation of  “UNE-p” (unbundled network elements-platform)…a regulatory form of government-mandated license for telecom “have nots” to take from the Bell “haves”.  

In what for any other setting, would be a preposterous 4th Amendment “takings” action, so called Competitive Local Exchange Carriers” (CLECs), can demand that Incumbent Local Exchange Carriers (ILECs) provide central office and distribution facilities at “wholesale” rates - typically at about 60% of what said plant costs the ILECs to construct and maintain. In most instances, the CLECs choose not to build their own central office equipment in telco offices - instead, just market and bill for the re-branded existing ILEC capabilities. All this implemented via an arcane acronym - TELRIC (Total Element Long Run Incremental Costs)…the FCC’s economic model the state  regulatory bodies are required to use calculate “wholesale rates” at which ILECs must lease facilities to CLECs).

Faux Competition

This is not legitimate competition or the market place at work. There could be no complaint by any ILEC shareowner or employee, were genuine competitors to move into a market with their own capital to fund and build new or better technology, service and prices. DVD and CD content providers did not demand that Compact Cassette, 8 Track, VHS and LP record marketers subsidize their new and better digital media technology. Neither would the US Postal Service be expected to provide floor space and personnel at below cost, to enable a new mail delivery service to offer first class mail at 25 cents per letter

Breaking A Social Contract

This latest and most disastrous FCC attack on a nearly century long “telecom social contract”, leaves in its wake shells of three once innovative and profitable leaders in telecom technology.  Nortel, Lucent and Alcatel have been forced to destroy 500,000 well paying jobs and the revenues they produced. Their shareowners have suffered unwarranted losses of trillions in equity. It’s as though CLEC faux “entrepreneurs” were authorized to abscond with portions of each shareowners investment without paying for such takings.

Slow Motion Treason - Frankfurt School Style

Had a band of offshore invaders come to our shores, with a plan to accomplish in “9-11 fashion” (and in one instantaneous action), what the FCC and DOJ have persistently  ground away at since reopening the Consent Decree of 1956, there would not be enough newsprint, printers ink or TV time to convey the dimensions of such economic and national defense “terror”. 

Sadly, like so much other relentless “Sovietizing” of America in education, media, entertainment, race, religion and politics, this once paragon of world telecom excellence, is being dragged down to the same common denominator which the “Frankfurt School Four” (from pre-WII Germany) had in mind, when they came to America to accomplish by “societal subversion”, what  Marx, Lenin and Stalin were not able to accomplish with force-imposed violent Communism. Not the rantings of a conspiracist, just some reflections about the slow motion political erosion of one national treasure after another.

Time For Some Moral Integrity

Hopefully FCC Chairman Powell will have the moral integrity to revisit the history of what Theodore Vail and the Interstate Commerce Commission worked out in the early 1900s with the “Kingsbury Commitment”, i.e., that agreement which enabled AT&T, as a “chosen instrument”, to submit to “reasonable regulation” (of service and profit) in return for providing “end-to-end accountability”, “assuming national network management” and “offering affordable universal telephone service”.  

Only a few history books and some aging “Bellheads”, possess and can convey comprehension of this  “telecom treason”, which the FCC has engaged in for nearly 50 years.

Donald E. Lively

Lafayette, CA

17 January 2003

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