Are Telecom Networks Public Property?

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[From the Phoenix Center news bulletin- BSA]

Dear Phoenix Center Community:

We are pleased to announce that we have just issued a new policy Perspective
by Phoenix Center Adjunct Fellow George Ford entitled The Public's Network?

In this Perspective, Dr. Ford takes on the Heritage Foundation's
"Backgrounder" entitled Are U.S. Telecom Networks Public Property? by James
Gattuso and Norbert Michel, who claim that the current telephone network was
paid for by the shareholders of the incumbent Bell monopolists and not by
captive ratepayers who bore the downside risks of network construction over
the past century, primarily as a result of the government's use of
franchised monopoly and price regulation in local telecoms (i.e., guaranteed
rates of return funded by consumers).  As Dr. Ford explains, Gattuso and
Michel's financial analysis is replete with analytical errors and data
problems.  After Dr. Ford corrects these errors, however, he finds that
Gattuso and Michel's conceptual framework actually implies that ratepayers
bore the downside risk for the construction of 96% of the current Bell
Company local exchange network.  Thus, concludes Dr. Ford, ratepayers have a
sizeable claim regarding the policy outcomes of efforts to promote
competition to the incumbent Bell monopolists' wireline networks.

As always, Dr. Ford's Perspective may be downloaded free from the Phoenix
Center's web page at:
http://www.phoenix-center.org/perspectives/Perspective04-02Final.pdf.

Finally, there is one other significant development that we would like to
bring to everyone's attention:

As you all know, in Phoenix Center Policy Bulletin No. 8: The $10 Billion
Benefit of Unbundling: Consumer Surplus Gains from Competitive Pricing
Innovations (http://www.phoenix-center.org/PolicyBulletin/PCPB8Final.pdf),
the Phoenix Center empirically measured the gains to consumer welfare of the
new "all-distance"/"all you can eat" competition produced by the
market-opening provisions of the Telecommunications Act of 1996.  After
review, the Phoenix Center's analysis revealed that the consumer welfare
gain amounts to approximately $10 billion per year, and those American
households that have switched to these all-distance plans, on average, save
approximately $429 every year - more than a dollar a day.  We were
particularly gratified that major news outlets such as the Los Angeles Times
(http://www.phoenix-center.org/IntheNews/04c/LATimes3March04.pdf), the Miami
Herald
(http://www.phoenix-center.org/IntheNews/04b/MiamiHerald27January04.pdf) and
the Milwaukee Journal Sentinel
(http://www.phoenix-center.org/IntheNews/04b/MilwaukeeJournal27Jan04.pdf),
along with major trade outlets such as Communications Daily
(http://www.phoenix-center.org/IntheNews/04c/ComDaily30January04.pdf),
Telecom Policy Report
(http://www.phoenix-center.org/IntheNews/04c/TelecomPolicyRep28Jan04.pdf)
and TR Daily
(http://www.phoenix-center.org/IntheNews/04b/TRDaily27Jan2004.pdf) reported
on the importance of our research.

However, on 26 April 2004, the Phoenix Center received a "cease and desist"
letter from SBC Communication's intellectual property attorneys claiming
that the Phoenix Center's use of the descriptive term "all-distance"/"all
you can eat" competition in Policy Bulletin No. 8 infringed upon SBC's
trademark of the brand name "ALLDISTANCE".  Although our counsel has
informed us that this claim is specious (particularly as we are not selling
a rival product that could be confused in the market but are only using a
descriptive, generic phrase in the context of conducting empirical policy
research), it makes absolutely no sense for us to spend a penny of our
limited resources to fight this ridiculous claim further.  For this reason,
the current versions of Phoenix Center Policy Bulletin No. 8 on our web page
have replaced the phrase "all-distance"/"all you can eat" competition with
the phrase "nation-wide, all you can eat" competition.  

This being said, the Phoenix Center has always openly posted opposing views
on our web page in order to promote an open dialectic. See
http://www.phoenix-center.org/crit.html.  By making SBC's requested
technical edit, therefore, we now expect SBC to have the professional
courtesy of discussing the legal and economic merits of our work on a
scholarly basis and to participate responsibly in the debate.  

For those interested, a copy of SBC's "cease and desist" letter may be
viewed on the Phoenix Center's web page at:
http://www.phoenix-center.org/PolicyBulletin/SBCThreat.pdf.

Thank you for your support?. 

Phoenix Center for Advanced Legal & Economic Public Policy Studies

5335 Wisconsin Avenue, NW
Suite 440
Washington, D.C.  20015
Tel:  (+1) (202) 274-0235
Fax: (+1) (202) 422-8257
E-Fax:  (+1) (202) 318-4909
E-mail:  [email protected]
Web Page:  www.phoenix-center.org
Social Science Network Author Number: http://ssrn.com/author=365900

The Phoenix Center is an international, non-profit 501(c)(3) organization
that studies broad public-policy issues related to governance, social and
economic conditions, with a particular emphasis on the


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