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AT&T Chief: Repeal Telecom Act

Washington -- AT&T Corp. chairman and CEO David Dorman said Thursday that Congress should repeal the Telecommunications Act of 1996 -- a law that he said inspired endless rounds of litigation and cemented regulatory disparities favorable to wireless-phone and cable-television companies.

“While inevitably, there are some things that need to continue on -- I’m not going to be naïve enough to say that we can be in a world without any regulation today -- my quick answer is to repeal it,” Dorman said in a speech here.

In drafting new legislation, Congress should copy the light regulatory treatment accorded the wireless-phone industry, which has seen usage and revenue soar while offering consumers better bundles of minutes at declining prices, he said. Last year, wireless carriers had $95.5 billion in revenue and 175 million subscribers.

“We should take a clue from that. So whatever gets done should be done with a careful eye toward as little regulation as can possibly be justified,” Dorman told a joint forum hosted by the American Enterprise Institute and the Brookings Institution.

Dorman also indicated that the cable industry has flourished because it did not have to cope with regulations that apply to local phone companies, particularly with regard to broadband deployment.

“So whatever gets done in the Telecom Act, it should truly be a level playing field," he added.

Dorman’s comments came as federal regulators are reviewing SBC Communications Inc.’s $16 billion offer to acquire AT&T Corp. -- a merger fueled by AT&T’s decision to exit the local-phone market after court rulings and Federal Communications Commission actions priced “Ma Bell” out of the market.

“Obviously, the Telecom Act, over its nine-year period, has been probably been the most litigated piece of legislation we’ve ever had," he said.

Once a long-distance giant that choked on debt assumed in cable mergers, AT&T was also brought low by a combination of Baby Bell entry into long distance, wireless packages offering any-distance bundles and ongoing cable-company deployment of voice-over-Internet-protocol service.

Congress, Dorman said, had to address the subsidy programs for rural consumers called universal service and rules governing payments between telecommunications carriers for the exchange of traffic. The relationship between the FCC and the states also needed reforming, he added.

“Today, if you are a company like AT&T operating everywhere, it is mind-numbing to keep up with each state’s regulations -- what can they say, how can they do it,” Dorman said.

House and Senate lawmakers are working on new legislation, with the House moving at a faster pace than the Senate. The goal of new legislation should be removal of legacy regulation, not the extension of those rules to companies not governed by them today, Dorman said.

“I think less is the answer, not more,” he added. “People say, ‘Well, let’s regulate the cable guys more or regulate the wireless guys more’ -- that’s not the answer.”

In the absence of a new law, Dorman said the FCC could address universal-service and intercarrier-compensation issues that have been long neglected. He added that uniform rules for VoIP services were also needed.

“I think that some of these very important issues have not been dealt with, and I very much hope [FCC] chairman [Kevin] Martin, as he takes up his new responsibility, will deal with some of these and put an end to the uncertainty that has existed in many of these areas,” Dorman added.