AT&T’s proposed acquisition of Time Warner has reverberated like a gong through the technology, media and telecom sector, and there’s a reason for that. It’s a deal that could change everything, and that’s why the government must stop focusing on the wrong things and realize the real issue: now’s the time to force companies like AT&T to split their local networks from their services business, and trigger a new wave of innovation.
Any deal with a price tag of $85 billion will always trigger a storm of commentary, but most of the chatter surrounding AT&T’s proposed acquisition of Time Warner has been way off base. I’ve built my career in telecoms over 30 years, and what that’s taught me is that most people are paying attention to the wrong part of this deal.
Let’s stop worrying about a monopoly on content: a good story well-told will always find an audience. The government’s focus must be on the opposite end of this deal, on AT&T’s telecommunications infrastructure and what should become of that network now.
Now is the time for the government to take the bold step of updating the laughably outdated Telecommunications Act of 1996. In fact, the Act was born obsolete: it took 10 years to become law and contains just two references to the Internet.
What’s required is a change in the Act that would require the forcible separation of AT&T into separate arms, splitting its retail services business (providing content, as well as products like broadband, TV and voice) from its local network business.
Once established as standalone, open-access infrastructure, this local wholesale network would be available to all licensed operators, including AT&T’s own retail arm, on a level playing-field basis. Any service provider – and any content provider – could use the network to push traffic to end users.
And with that kind of competition, you can bet prices would be more affordable for end users. AT&T would also be strongly motivated to modernize, maintain and enhance the local network and innovate local services. It has no such incentive today.
The focus is local
Let me be clear. I’m not talking about AT&T’s entire infrastructure (local, long-distance and international networks): the real issue is in local networks, especially in historic service territories, and the split should apply to Verizon as much as to AT&T.
Mandating the split of an incumbent’s local distribution facilities from its end-user services may sound radical, but it’s not unheard of: it’s currently being debated in the UK and other developed countries.
It’s also the simplest answer to the question that’s really at issue: what do we want America’s future to look like? Not just its telecoms future, its entire future.
Telecoms is no longer a nice-to-have. Like water, power, and sanitation, telecommunications is a utility. Arguably it is the greatest utility, with the most potential to tackle critical problems of inequality both in the US and globally. Has government considered the role telecoms should play in closing that divide?
Access to information and technology ― enabled by telecommunications – can strike a tremendous blow for equality. When you provide affordable access to the telecommunications utility, you enable access to healthcare, education, public services, opportunities for employment and entrepreneurialism. You know what that is? It’s a win-win-win-win-win.
The time is now to recognise telecoms as a utility
Regulators have a rare opportunity now to act boldly and quickly, to effect major policy change. Instead of taking piecemeal regulatory steps over a decade to react to the AT&T deal, the government should act now to overhaul the Telecommunications Act, separate off telcos’ local networks, and in turn trigger the same wave of innovation that followed the Act in 1996.
AT&T ran the telephone network for 100 years, but it innovated against the unnatural backdrop of its monopoly market position. Later, it was consistently out-innovated by rivals, and competition sparked the rapid evolution of networks, software, and hardware. Think of all you’ve done today with your phone, a device that’s an inseparable part of everyday life.
Ironically the Internet itself happened in spite of the Telecommunications Act, not because of it – the Act took too long to gestate and emerge, and technology moves too fast for that.
Wouldn’t it be nice if lawmakers were instrumental in delivering systemic change this time, instead of chasing behind it?
There comes a time once in a generation where the government can make truly far-reaching change possible. This is the time, and this is the change: an aggressive updating of the 1996 Act, in recognition of the unacknowledged truth, that telecoms is the last great utility.
You want to change society? Change how it accesses technology and information. Blow this market open, enable the widespread technological enfranchisement of more people ― at affordable prices, free of monopoly and duopoly controls.
It’s not the whole answer, but it’s one, meaningful way to start addressing the real causes of inequality.