The Twelfth Annual Aspen Institute Conference on Telecommunications Policy was held August 10-14, 1997 in Aspen, Colorado, over a year after the passage of the Telecommunications Act of 1996. The thrust of the Act was to promote true and effective competition in and among telecommunications service providers. Congress envisioned a vigorous, expanding system of advanced comons service providers. Congress envisioned a vigorous, expanding system of advanced communications goods and services, an end to monopoly in telephone, cable, and other transmission and access industries, and a better civic society and economy as a result.

The sentiment of the nation as it evaluates implementation of the Act, however, is mixed. Significant progress in some areas thus far has been balanced by stalemate in others.

The topic of the 1997 Conference, "Competition, Innovation, and Investment in Telecommunications," reflects one of the important areas for concern in the telecommunications community a year after the Act. Representatives of telecommunications carriers (local exchange, long distance, and wireless), cable industries, consumer, academic, and regulatory bodies at the federal, state, and local levels, representing a broad cross-section of interests, attitudes, philosophies and viewpoints, worked together over four days to define the difficult issues inherent in that topic and suggest practical resolution of these dilemmas.

The Conference began with a presentation by Dale Hatfield, then chief executive officer of the telecommunications consulting firm Hatfield Associates, who gave participants some background on the risks that competitive local exchange companies may see as they consider investment in the local exchange. (Hatfield's presentation was based on a paper co-authored with David Gardner and reprinted in the Appendix of this report.) Participants then turned to a full agenda of questions concerning legitimate social goals and government regulations at the federal, state, and local levels which affect incentives to invest and, ultimately, the amount of competition that develops. Have government regulations created any unintended consequences for expanding competition? Are there changes to current regulations that would stimulate investment?

The answers to these questions have tremendous implications for the emerging networked society and the economy as a whole. Answers were often difficult and contentious. But that has become typical of these Aspen conferences, and in spite of their conflicting viewpoints, participants were able to define their differences and in some cases make constructive suggestions for improvement. Thus, in the following report, Professor Robert Entman, the rapporteur for the Conference, records some suggestions that reflect group consensus as well as some issues in which no consensus was reached, reflecting the diverse positions held within the telecommunications industry. While the report generally reflects the sense of the group, the statements made here should not be taken in any way as the views of any particular participant or participant's employer unless noted otherwise.

Probably the area of greatest significance in the report - where a partial consensus emerged - is pricing. The group struggled at length over what many saw as a disincentive for incumbent local exchange carriers to invest in new technology if they must share that technology with competitors at wholesale prices. While participants generally agreed with the concept of a sunset to current wholesale pricing and unbundling requirements, they failed to reach consensus on a specific test for when that sunset should occur.

Acknowledgements

The Aspen Institute would like to commend conference participants for their openness, constructive attitudes, and willingness to grapple with the obtuse questions presented by the current regulatory milieu. A list of conference participants follows in the Appendix. We would also like to thank Robert Entman, our rapporteur for all twelve years of the Conference, for his excellent representation of the deliberations as well as his help in developing reading materials; our research associate, Susan Oberlander, for her help in developing the conference agenda and reading materials; and Elizabeth Golder, program coordinator, for her work on conference arrangements and this report.

Finally, but very significantly, we want to thank our Conference sponsors from competing organizations whose contributions made the Aspen Institute Conference on Telecommunications Policy and this report possible. They are Ameritech, AT&T, Bell Atlantic, Cablevision Systems, California Cable Television Association, Cox Enterprises, Intel, MCI, Nortel, NYNEX, Sprint Spectrum, TCG Teleport Communications Group, and U S West.

Charles M. Firestone
Director, Communications and Society Program
The Aspen Institute
April 1998

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