Less Local Phone Competition

The New York Times – Administration Sides With Bells on Lease Discounts for Rivals

bq. The administration’s decision, which was announced in a legal case making its way to the Supreme Court, followed fierce lobbying and hardball tactics. Rivals of the Bells have threatened the administration that they intend to run television advertisements in swing political states accusing the White House of being responsible for higher telephone rates. For their part, the Bell companies have pledged not to raise rates before the November elections.

It doesn’t seem like changing the wholesale access rules would really effect the competitive marketplace. While there are some players that have entered the local market ( “(extlink)AT&T”:www.att.com and “(extlink)IDT”:http://www.idt.com for example ), the real competitive pressures on the local bells seem to be cable, wireless, and VOIP providers like “(extlink)Vonage”:http://www.vonage.com . Since changes to line leasing rules probably wouldn’t significantly affect either of these competitve threats, I doubt you’d really see enough decreased competitiveness to change rates.

p(update). “(extlink)Skype announced plans to connect to the PSTN”:http://www.eweek.com/article2/0,1759,1610074,00.asp?kc=EWRSS03119TX1K0000594 which only serves to highlight the number of new-technology phone competitors we’re seeing. Combined with technologies like IM and videoconferencing, I suspect we’ll only see more players coming out.