Local Service Competition 7 Years Later . . .

Kathleen LaValleJackson Walker L.L.P.901 Main St., Suite 6000Dallas, TX 75202Klavalle@jw.com

Local Service Competition Seven Years Later . . .

• Challenges to Achieving Effective Local Competition

• Local v. Long Distance Market Entry: Stats & Sustainability

• Positive Indicators of Whether Local Competition is Working

• Threats to Local Competition: Knowing the Danger Signs

• If We Knew Then What We Know Now . . .

Challenges to Achieving Local Competition

• Uncertainty . . . Still More Uncertainty to Come

• Rigid Timetables Versus Untimed Results

• Interoperability: Valued Customer/ Rival Suitor

• Ensuring and Measuring Performance

Local v. Long Distance Market Entry: Texas Stats and Sustainability

Competitive Local Service Provider Market Share Seven Years Later . . . .*

16 Percent – Rural and Urban Customers13 Percent – Suburban Customers

SBC Long Distance Market Share Three Months After Entry . . .

15 Percent

* Texas PUC: “not clear that such competition is sustainable”2003 Report on Scope of Competition in Telecommunications

Markets

Positive Indicators of Whether Local Competition is Working

• Bell Company Out-of-Region Local Competition

• Innovative, Competitively-Priced Bell Retail Offerings

• Drop-Off in Bell Company Fines and Penalties (exceeding $2.1 billion since 1996)

• Incumbent Win-Back Programs Less Successful

Threats to Local Competition: Knowing the Danger Signs

   Tell-Tale Shifts in Rhetoric    “Discounted” Rates v. Cost-Based Rates    “Share our Network” v. Nondiscriminatory Access    Forgetting About or Looking to Re-Trade the Deal

If We Knew Then What We Know Now . . .

• Structural Separation Worked to Create Robust Competition in Long Distance

• Problems Solved with Structural Separation of

Bell Company Wholesale and Retail Sides