Benhamou: Telecom Can Save Tech

3Com chairman says best way to stimulate broadband deploymentis to give incumbent carriers more incentives, fewer regulations

Illustrating the inextricable ties between the technology and telecommunications industries, Eric Benhamou, chairman of the board at 3Com Corp. and Palm Inc., urged policy makers today to stimulate broadband network deployment as a means of bolstering the tech sector.

The best way to stimulate broadband deployment, Benhamou said, is to give incumbent telephone companies greater incentives and fewer regulatory requirements.

The telecom recommendations from the Silicon Valley stalwart come at a time when lawmakers, pre-occupied with fighting terrorism, have shelved almost all other policy initiatives. Formulating new telecommunications policy is not a priority in Washington. However, the interests of the telecom and technology sectors, like the interests of most of the countrys major industries, have found their way into the debates on anti-terrorism measures, and currently, on the pending economic stimulus package.

In an address delivered today at the New America Foundation, a non-partisan think tank in Washington, Benhamou said that if there is one thing that can be done to re-energize the technology sector, it would be accelerating broadband access deployment.

The rate and quality of deployment since the Telecommunications Act of 1996 has been disappointing, said Benhamou, who is a member of the board of directors at New America. The CLEC (Competitive Local Exchange Carrier) model has failed, largely because service providers did not provide sufficiently differentiated services. "The only potential difference is in the marketing of the service and perhaps the tone of voice of the person who answers when you call up the service number," he said.

Additionally, Incumbent Local Exchange Carriers, or ILECs, were not sufficiently motivated to build their own broadband facilities and offer innovative services. Because the regional local telcos are the only carriers with deep enough pockets to pursue widespread broadband build-out, the government should guarantee a market return on the investment. "At this point, theres not a lot of money going around," Benhamou said. "Only [the incumbents] have enough money to fund accelerated broadband deployment."

The major long-distance carriers are the sole surviving telecom operators capable of vigorously battling the ILECs in the policy arena. But while AT&T Corp., Sprint Corp., and WorldCom Corp. continue to successfully oppose ILEC lobbying efforts, merger discussion between the telecom camps may eventually diminish that rivalry.

Calling the ILECs track record "appalling," Benhamou said regulators would have to require complete transparency of their financial statements. "It is too easy right now for ILECs to come and whine to the FCC and their congressmen and say Im not making any money," he said. He set forth several other principles to guide policy makers in re-energizing broadband deployment, including technological neutrality and stronger copyright laws to encourage multimedia applications.