Telecom's brave new world.

• Author: Caroll, Ed
• Position: Cover Story

The digital revolution and telecom deregulation will transform the U.S. economy. In Alaska, the scramble is on for market share and new technologies.

The deregulation of the telecommunications industry in February has bent a kink in the wiring of everyday business and personal life. One sudden "Go!" in Washington - coming after 10 years' wrangling - and the country launched into a telecom liftoff that is expected to transform our economy.

With one bold leap that puts the country at the forefront of telecom deregulation, the federal government unleashed a blizzard of mega-corporate investment, takeovers and mergers. Long distance, regional and cellular phone companies, cable TV systems, software giants, Internet packagers and entertainment media are all jostling to package the best bundle of technologies for the coming marketplace.

Converging technologies are poised to pour a dizzying array of telephone, entertainment, Internet and high-speed data services into homes and offices through phone lines, fiber optic and coaxial cables, cellular and new wireless formats and direct satellite link-ups. These new tools threatened to overwhelm a regulatory framework patched together over the past 60 years, and now the Federal Communications Commission is struggling to forge the transition to a telecom marketplace of regulated competition that will encourage growth.

When will this vanguard reach Alaska - and what will it look like? How long before we can buy bundles like local dial tone, long distance calling, cell phone, television and high-speed Internet access from one company, in a free-wheeling competitive market?

Telephonic Convergence

The Telecommunications Act of 1996 requires local exchanges to allow other service providers, like AT&T, MCI, Sprint and cable TV and wireless systems, to connect to their networks and compete in the local calling business, worth an estimated $100 billion nationally. And while the local exchanges still own the switches and wires of the so-called "final mile," and will collect access fees, they no longer control who uses their lines.

The law also allows local carriers to compete for long distance callers using the others' equipment, giving them entrance to a business worth an estimated $75 billion nationally.

The great attraction in this competitive tangle will be the best bundle that offers consumers a package rate and one-statement convenience for all their communications needs. While Alaska has seen some evidence of the buyout binge that's rearranging the grid of the Lower 48, the size of the market here and a battle for entry into local markets may slow free market momentum.

While the Telecommunications Act offers sweeping reform of national policy, the industry is far too complicated for market-by-market details to originate with Congress. It's up to the FCC and state regulators to make case-by-case rules guiding the transition.

Several themes run through the federal law, says Bob Lohr, executive director of the Alaska Public Utilities Commission. Encouraging competition and convergence is foremost, but protecting affordable universal service and rural local carriers is also part of the law, "Even though implicitly that's a tradeoff against competition.

"There's also a very strong theme for advanced telecom services to be provided ubiquitously throughout the country," and soon, Lohr says. "That's a pretty significant national policy statement.

"I think it's a challenge for this commission, as well as other regulatory bodies - the FCC in particular - to try to figure out how to blend those different themes together to really make it all work well."

Don May, the director of Alaska Pacific University's four-year-old MBA program in telecommunications management, says, "We're small, and the FCC doesn't always know what to do with us."

What to Look For

The first changes will likely come in Anchorage, now served by the city-owned local carrier, ATU Telecommunications. AT&T...