Qwest Communications International Inc.'s dominance of the local phone market has been blamed for high prices and poor service. On Wednesday, it was criticized for stifling telecom innovation in Utah.
Jerry Oldroyd, a longtime telecom attorney, told the Legislature's Competition in Telecommunications Industry Task Force that competition sparks the development and deployment of telecom advances.
"If we're going to have innovation and encourage technology and deployment of new technology, we need competition," Oldroyd said. "We need to have a competitive marketplace, in long distance and data transmission and in the local market. We have not been able to achieve that, particularly in the local market, to date."
At stake, he said, are Utah's economic development opportunities. High-tech companies say availability of bandwidth is a major consideration in their decisions to locate operations in states. He added that those companies now are so powerful that rather than move in and ask for service, they can dictate the type, quality and availability of telecom services they need.
"If the state does not have companies that can provide those facilities, chances are that we're not going to get that company to come to the state of Utah," he said.
He cited Logan, with what he called "some serious broadband problems," as an example. "How do you go ask a company to move to the new research park at Utah State University if you can't guarantee that there's going to be adequate telecommunications to meet that company's needs? That's a really tough sell for the state of Utah," Oldroyd said.
The lack of competition makes it a tougher sell, he added, because companies have no alternatives to Qwest outside the Wasatch Front. And the telecom industry is suffering from a lack of available capital, another factor thwarting technology deployment.
Chris Blake, Qwest's manager of community relations, said a lack of capital and a general economic downturn are to blame.
"The telecom industry does have its problems right now. There are some serious problems, both from a competition standpoint and from a more general economic standpoint," he said.
Blake said Qwest and others are finding that many people signing up for digital subscriber line or cable modem service have cut back as their disposable incomes have dwindled.
"And the capital markets have dried up. There isn't the kind of money that was available a couple of years ago when this boom started to sustain the kind of rollout that we had," he said.
Oldroyd found fault with the Utah Public Service Commission's ruling Monday that Qwest's network is open to local-service competition. "The one problem is, the Qwest network is open to competition, but there are no competitors," he said.
Blake countered by saying incumbent Baby Bells like Qwest aren't responsible for providing competitors.
"I realize and understand that there are a number of companies that are not competing like they had hoped to do. But is that Qwest's fault? No. Do I believe there are some areas, possibility in pricing or in other areas, that need to be addressed? I believe so," Blake said.
The pricing he referred to was for what is known as unbundled network elements, parts of the Qwest network that competitors lease in order to provide local service.
Oldroyd said reasonable pricing of network elements would help bridge the gap in competition, "but even that won't solve the capitalization problem."
Scott Dansie, local government and franchising director for AT&T Broadband in Salt Lake City, said any added costs in Utah hurt the state's chances of getting technology advances.
"We're competing against all the markets across the United States for capital, and we have to show the company we will provide a good return on its investment," he said.
Phil Windley, the state's chief information officer, noted that Utah's regulatory environment causes telecom companies to ask him to speak to legislators about laws — a legislative solution rather than a market solution.
"To me," he said, "that exemplifies where we're at."
E-mail: bwallace@desnews.com