The slippery slope toward . . . nationalization?

For those of you just returning from an extended vacation on Mars, there’s been some trouble in the competitive local exchange carrier market.

CLECs are demonstrating the shelf life of an open jar of mayonnaise, and the customers who were supposed to benefit from deregulation are instead suffering service disruptions and frantically replacing equipment to switch providers.

Norigen is the most recent carrier to have bolted the shutters. The infrastructure team leader of one customer tells me that he was vacationing when the word came down, on a Wednesday, that his international clientele was going to have trouble reaching him, as the company’s long-distance service was to be terminated that Friday. The following Friday, local service would be cut off.

Former CLEC customers are flocking back to the secure arms of Ma Bell, who can’t get ’em back online fast enough.

Phone service is critical to the operation of a modern business (defining modern, of course, as anything since the 1930s). Instability in the provision of that service is a threat to continued business. There are other services – electrical power distribution comes to mind – that are also so essential to the economy that we cannot afford disruption and continue to be competitive.

Consider the situation in California, where deregulation and lack of regulatory oversight have led to rolling blackouts, skyrocketing electrical bills and a multi-billion-dollar lawsuit against electricity providers for overcharging. Here in Ontario, the electrical revolution continues apace, so far with minimal disruption. But when the infrastructure belongs to shareholders, the bottom line takes precedence over the quality of service. After a couple bad quarters at Hydro One, do you think your business will get away without a substantial rate hike or service disruptions?

In the telecom industry, the trend seems to be a devolution toward de facto regional monopolies once again. Know what? For a service as crucial as the phone network, the stability of a regulated monopoly isn’t so bad, in my humble opinion.

In fact, if a service is so vital that its stability must be a higher priority than its profitability, doesn’t it stand to reason that not only should it be a monopoly, but perhaps a government monopoly?

Hold the phone, so to speak. Nationalization is a slippery – and expensive – slope. However, a degree of government ownership in infrastructure would ensure that there is a balance between the goals of consistent service and profitability. Government ownership makes you a shareholder, and thus, theoretically, makes a utility accountable to your business needs.

The experiment with deregulation must be monitored closely. If we get too far down the road to California, it’ll be an expensive proposition to return stability to our business infrastructure.

dwebb@plesman.com

Shane Schick is on holiday and will return next week.

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