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Tuesday, July 23, 2002

Pittsburgh Post-Gazette

Upstart competitors battling Verizon

While Pennsylvania works to attract high-tech companies and the well-paying jobs that come with them, it's worth noting that the largest local phone company in the country and in Pennsylvania, Verizon, is steadfastly working to keep certain technology start-ups out: namely, companies that pose a competitive threat.

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I run such a company here in Pittsburgh. Called Full Service Network, we offer phone service, including local phone service, to customers in the Pittsburgh area, competing with Verizon.

We own some of our own facilities, including three communications switches, and employ more than 30 people, many of whom are graduates of local universities.

A native of Florida, I could have returned there after attending the University of Pittsburgh, but love the region so much that I chose to grow my business here. This is a great place to be if you need talented, well-educated and dedicated people.

Pennsylvania also seems to be committed to fostering competition in markets that traditionally have been monopolies (natural gas, electricity and now local phone service).

Unlike many competitive local exchange carriers that have been buried under huge debt burdens, Full Service Network has no debt.

We do have an aggressive business plan that calls for more infrastructure investment and in the next year 100 additional employees, assuming Verizon's myriad efforts to quash competition in Pennsylvania's local phone service market are countered with appropriate regulatory action.

What needs to be done?

The single most important action regulators can take to ensure that companies like Full Service Network can continue to compete and grow in Pennsylvania is very simple: As was done in New York, Ohio, Illinois, New Jersey and Michigan, where consumers now do or soon will enjoy the benefits of a hotly competitive local phone market, Pennsylvania must reduce [Verizon's] exorbitant wholesale prices. Under federal law, companies like mine are entitled to lease Verizon's network at reasonable prices.

Verizon's wholesale prices today are at least 40 percent too high, and now [Verizon], which has been expanding into the state's long-distance market, is requesting price hikes of more than 1,000 percent in some cases!

Today there is absolutely no economic incentive for competitors to move into the local phone market in suburban and rural areas of the state, leaving 75 percent of Verizon's customers with no real choice when it comes to local phone service. Verizon has created a digital divide, in effect, using wholesale prices to deprive the most rural areas of the state of competition and the infrastructure investment that results from competition.

Besides cutting Verizon's wholesale prices, there are other actions the Public Utility Commission must take to rein in the Verizon behemoth. Pennsylvania was onto something when in 1999 the PUC introduced an economic incentive for Verizon's wholesale unit to provide competitors with the same level of service it provides its own retail unit.

Setting the Verizon wholesale business apart as a unit accountable for making money by serving competitors was an idea whose time had come.

This model works in the long-distance arena, where long-distance companies have wholesale units that make money by serving competitors, including Verizon, which leases long-distance lines at a discount of more than 50 percent.

Unfortunately, Verizon succeeded in scaring Pennsylvania away from this logical approach, threatening job losses and higher phone bills if the PUC followed through.

Now the PUC is working to impose a Code of Conduct on Verizon's wholesale unit, and it's extremely important that the code be applied to the Verizon unit that actually serves competitors, and that it be strong and enforceable. Otherwise, Verizon will continue to make life very difficult for competitors like Full Service Network, which rely on Verizon for ensuring smooth transitions that are important to customers who switch carriers.

For example, Verizon must confirm on a timely basis when a customer has been turned over to us so we can accurately bill, and ensure that our customers who want to be listed in the phone directory don't get their listing dropped when they become our customer.

Today such logistical matters are all too frequently mishandled by Verizon, intentionally or not.

At Full Service Network, we are excited about our future in Pennsylvania. We believe we can grow here by competing on our merits as a quality service provider. It's time now for Pennsylvania to make it possible for us and others like us to compete on our merits against Verizon.

State regulators must level the competitive playing field in the local phone service market. The sooner the better for consumers as well as competitors.

DAVID SCHWENCKE
President, Full Service Network

Local economy needs global perspectives

How to make the region more competitive economically? A new article on the findings of the Allegheny County International Transition Team formed by Jim Roddey makes the case that while Pittsburgh's economic vitality is linked to creating a greater international presence, we are burdened by a "regional culture that doesn't foster global perspectives and attitudes."

Global Connections Pittsburgh is pleased to report that this attitude seems to be on the wane and with any luck may soon be a thing of the past.

Minimally we contest that international organizations in the Pittsburgh region are finally at critical mass and are poised to become more broadly visible, integrated and effective.

Global Connections is a nonprofit organization whose mission is to increase awareness of and engagement with the developing world by building a regional coalition of organizations and individuals with international concerns. As one of our first projects, we compiled the "Pittsburgh International Resource Directory: A Guide to International Goods, Services and Connections in the Pittsburgh Region." We were truly amazed to discover so many organizations with an international focus here in the Pittsburgh area -- over 400 at last count and growing daily.

This vitality bodes well for a real international presence in the Pittsburgh region, but like many things in Pittsburgh, so many of these organizations are unaware of each other's existence and operate in isolation.

Global Connections Pittsburgh is committed to changing that. In the belief that the whole is definitely greater than the sum of its parts, we are working to weave these individual organizations together into an effective coalition through networking, resource sharing, educational programs and public forums.

We believe these connections in turn will then spark alliances that will bring the level of international presence all eagerly anticipate.

With greater global understanding and increased awareness of our local-global connections, we can help to create not only a healthy Pittsburgh economy but also a healthy global economy.

We encourage all Pittsburghers to learn about the many wonderful international opportunities our region offers and help usher in an exciting new era of international awareness in our city.

BARBARA WEIN
Point Breeze

Wanted: Discount airline service

Although I realize that US Airways is a large employer in this region and we can support it up to a point, I think we do need some competition from discount carriers.

Airtran Airways, with a lot of lobbying from county officials, came in here in December 2000 like gangbusters, forcing Vanguard Airlines out of the Pittsburgh-Chicago Midway market, entering the Pittsburgh-New York La Guardia market, and the Pittsburgh-Atlanta market.

A few months later it entered the Pittsburgh-Philadelphia market. Now a year and a half later, all we have left is three flights a day to Atlanta.

I am a user of both Airtran and Vanguard. When I go to Chicago Midway, the Airtran flights are always at least three-quarters full; the Atlanta flights are sometimes completely full.

I feel that the Post-Gazette hasn't been completely kind to any of these airlines that have tried to get started here.

First of all, you had to make an issue that Airtran was really Valujet, with a different name. I think that was more information than we needed to know. Yes, Valujet merged with Airtran in the late '90s, but even though smaller, Airtran was the surviving company, and became a real player in the airline industry. Instead of writing positively about this new entry to our city, you gave potential customers reason to not use them.

Spirit Airlines a few years back also served Pittsburgh with flights to Atlantic City, N.J., and Fort Myers, Fla. You ran an article on them once stating they were not a very big outfit and did not advertise. They pulled out of Pittsburgh.

They now are a very successful discount carrier flying coast to coast, and to Florida and Puerto Rico.

Although you are quick to report when Airtran is cutting flights, I saw no report that Vanguard added another flight to Kansas City on Monday.

It seems like the PG is trying to protect US Airways and wants to help them force the competition out.

Watch closely. When US Airways begins Pittsburgh-Chicago Midway service and Airtran pulls out, fares will go up; then US Airways will discontinue that service and force all Chicago passengers to O'Hare, thus depriving Pittsburgh passengers connecting service to the other discount airlines at Midway.

ALAN HECHT
Jefferson Hills

Lock up executives

Being a businessperson for 28 years, I find no useful purpose in putting corporate executives in jail for the cheating and borrowing of money, then fining them only a small portion of what they borrowed with no intent to repay.

Let them repay from their family fortunes and work off the rest as any not-so-elite person caught stealing would have to do. If their families go broke, so be it.

Most important, pay back the bonuses received from inflating the earnings.

DON CALLEN
Wilmore, Cambria County

What of accountability?

Why the shock over corporations cooking their books and CEOs playing dumb? What greedy CEO wouldn't follow the example set by an impeached president, disbarred in his own state? If a president can dupe Americans and beat the rap, what's to stop a CEO?

Besides, we're Generation U. The Unaccountable. Our kids don't misbehave in school; they're poorly taught. Our lung cancer doesn't come from 40 years of inhaling a known carcinogen; it's Big Tobacco's fault. It's not that I did the crime; it's what my father did to me.

Unaccountability protects our growing national obsession to out-point others. Our kids have to be the athletes we never were, regardless of whether they want to be. Houses and cars must exceed our needs because it's possible. It's no longer about how we comport ourselves. It's about what we get to drop into conversations to impress people at parties.

CEOs are us. We want to win at all costs, beat our own drum and make more cash. If our actions ever appear unscrupulous, we switch to victim mode, blame others and hide behind a Constitution that patriots took musket balls in the face to provide.

It's the new American way.

So let's drop the outrage. We're the ones who elected a corrupt man to our highest office and never held his feet to the fire. We're the ones who think it's stylish to call infidelity a peccadillo.

It's sweet irony, then, that people who believe the betrayal of human trust is only a petty fault would be swindled out of pension and retirement funds by smooth operators who did nothing but follow Slick Willie's lead.

ROBERT SZYPULSKI
Irwin