Deregulation: Bonanza Or Bust?

The Telecommunications Act of 1996 vowed to break up communications monopolies and spark competition. Here's how you can take advantage of a multibillion dollar industry.

against any other. The most immediate impact of the Telecom Act allows long-distance companies to compete in local markets for customers and local phone-service providers to compete in the long-distance market. Before they can compete outside their areas local providers must first open their markets to competition.

However, a ruling last December struck down this portion of the act saying that it unfairly kept “Baby Bells” out of the long distance arena. The FCC plans to appeal this decision, made by the lower U.S. Appeals Court for the Eight Circuit in St. Louis, to the Supreme Court this fall. To ensure everyone has access to basic local phone service, the Universal Service provisions to the Telecom Act says providers must offer service at an affordable price to all Americans regardless of where they live.

Minority-owned radio stations are already feeling the effects of the Telecom Act, which among other things, allows one owner to own multiple radio outlets in the same market. “We have seen tremendous consolidation in the radio industry over the last year and a half, and as a result the number of minority owners of these stations has declined,” says Sandoval.

According to the Department of Commerce, nationwide minority ownership of commercial broadcast properties has dropped from 3.1% to 2.8% in the past year (see “Black-owned Radio Stations Tuning Out,” Newspoints, September 1997). Currently, African Americans make up less than 1% ownership in the telecommunications industry overall.

The idea behind this deregulation was to break up consolidation in the industry and spark competition. However, it may have had a reverse effect. Six months after its passage, there were some $850 billion worth of mergers between phone service providers, cable companies and computer giants. What does this mean for the small, minority business owner? It depends upon whom you ask.

Opponents of the Telecom Act say it merely represents a consolidation of the old guard in which a few major players with deep pockets control most of the telecommunications industry, much like the former AT&T monopoly. Advocates, on the other hand, say completed and pending mergers spawned by the Act–such as MCI and Worldcom, Bell Atlantic and Nynex, and SBC and Pacific Bell–give African American entrepreneurs an opportunity to develop partnerships with major conglomerates.

“Traditionally, these companies have not relied on us as being major players even though we spend money buying the pagers and cell phones,” says Telecon’s Brady. “But with the mergers that happened since the Telecom Act was passed, a lot of people have been laid off, and these companies are looking to outsource many of their needs to smaller firms, including minority-owned firms,” he explains. Motorola recently approached Telecon about providing end-user training for their handheld radios.

Monica Conley, president of the National Association of Black Telecommunications Professionals credits the Act for opening up procurement opportunities for small minority-owned firms. However, she says deregulation has offered black business owners few affordable options beyond subcontracting.

“The Telecommunications Act did not mandate that there be more opportunities for African Americans or minority businesses,”

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