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Industry insiders say weak telecom firms
should be allowed to fail

From The San Jose Mercury News
October 28, 2002

By Dan Gillmor

DARWIN RULES: Don't prop up failing telecommunications companies. Let 'em fail.

That's the message from a forward-looking array of telecom gurus and observers to Federal Communications Commission Chairman Michael Powell. There's no word on what Powell thinks of their letter ( this week, but he should pay attention.

The letter, signed by more than three dozen people, most of whom are known better inside the industry than outside, urges that ailing (and soon-to-be-ailing) telecom firms should be allowed to ``fail fast'' rather than prolong the misery of the current shakeout. Only when rational economics, based on technological change, are allowed to prevail will we get on with the job of building tomorrow's voice and data networks.

One of the letter's more alarming conclusions is that the regional telephone monopolies, which provide most local service, will also be in trouble soon.

``Internet-based end-to-end data networking has subsumed (and will subsume) the value that was formerly embodied in other communications networks,'' the letter says. ``This, in turn, is causing the immediate obsolescence of the vertically integrated, circuit-based telephony industry of 127 years vintage.''

If this is true, we're only beginning to feel the turmoil of the telecom debacle -- and the current industry giants will be lining up for subsidies, favors and other special help. Don't give it to them, the letter says.

The letter's timing is interesting in part because the FCC is expected to suggest new policies on how to use the airwaves next week. If Powell and his colleagues are smart, they'll opt for more unlicensed spectrum, an arena where innovation has been particularly strong in recent years.

Smart spectrum policy could hurry the transition. That's exactly what we need.

Date last modified: 31 October 2002