Telecom Competition: Is The Battleground Shifting?

Peter W. Huber's 1987 report for the Justice Dept. on the U.S. phone business, The Geodesic Network, was highly influential in Washington. It predicted growing competition in local phone service and a continuation of AT&T's dominance in long distance. The Justice Dept. never asked for an update, but Huber did one anyway. In The Geodesic Network II, he says his 1987 predictions look better than ever. Cellular phone service and new, radio-based offshoots are undermining the wired local monopolies, Huber argues, adding that the nearly unlimited capacity of optical fibers could allow AT&T to reclaim its long-distance monopoly. AT&T has the most customers to cover the high costs of laying fiber lines. AT&T, however, says long distance is fully competitive.

Huber and his two co-authors have ties to the regional Bells. In fact, Huber, a writer affiliated with the Manhattan Institute for Policy Research, has testified for them in Congress. But he says the study should be judged on the quality of its insights. After predicting in the first study that AT&T would use cellular technology to invade local phone markets, the authors felt "vindicated," Huber says, when AT&T said it would buy a third of McCaw Cellular Communications Inc.