TNE Online Interview: USTA President Roy Neel

TNE Online Interview: USTA President Roy Neel

Paul Coe Clark III

Under the leadership of pugnacious President Roy Neel, the U.S. Telecom Association has been a powerful influence in Washington, fighting loudly for the interests of incumbent phone carriers. Hated by CLECs, supported with money and influence by ILECs and always listened to on the Hill, Neel made USTA a force to be reckoned with in the brutal fights that followed the ’96 Telecom Act.

Now, Neel, a longtime aide to Vice President (and Sen.) Al Gore, is stepping down to join Gore’s general-election campaign. He’s considered a likely White House chief of staff in a Gore administration. Gary Lytle (ex-Ameritech) is filling in for Neel during the campaign.

We caught up with Neel on a mobile phone while he was driving to his new job. (It’s OK, the Cellular Telecommunications Industry Association says that’s not as dangerous as people think.)

Q: Roy, how the hell are you?

A: I’m pretty good, thank you.

Q: You’re stepping down at USTA at a critical time. The ILECs are making a major congressional push to get into long-distance data service before satisfying Section 271 of the Telecom Act. How do you see that effort playing out? Do you think the Bells can get the bills (by Rep. Billy Tauzin (R-La.) and Sen. Sam Brownback (R-Kans.)) passed this session? The House bill, H.R. 2420, is now co-sponsored by more than half of the House members. But it’s opposed by Rep. Tom Bliley (R-Va.), chairman of the House Commerce Committee.

A: It’s an uphill fight, because Chairman Bliley has been blocking that bill for two years. He’s an opponent of the bill, and I think he’s going to keep blocking it until the last hours of his chairmanship. But I think Chairman Tauzin will continue pushing it.

Q: Is Bliley’s opposition an insuperable barrier until next year, after he steps down?

A: It has been so far. Billy Tauzin and John Dingell have pushed this as hard as they can. We’ve got 230 cosponsors, more than half the House. But the chairman of the committee controls the agenda. It’s fair to say he’s a huge obstacle until leaving Congress, or definitely until stepping down from the committee. I’m confident we’ll be in a good position to move that legislation, should it be necessary. The FCC can make that legislation unnecessary by deregulating data on its own, without a legislative mandate.

There’ll be a new commission next year. They’re kind of tired, obviously, and they’ve had a recent transition in the Common Carrier Bureau.

Q: CLECs strenuously oppose the bills, saying passage of them would end market-opening efforts under Section 271. Are their fears warranted?

A: I understand why they say that. But the CLECs have had a good run in the policy arena. The commission has bent over backwards to help them in the regulatory arena. And the markets have responded, pouring billions into that industry. But they’re going to have to start producing revenues. Investment isn’t enough. Just getting a special advantage through regulation won’t be enough.

Are their fears warranted? I don’t really think so. The state commissions have been very supportive of them to get them agreements in Bell-company markets. They don’t have to be afraid. Those who are simply trying to arbitrage the system for profits in sort of an artificial market, as we’ve seen with reciprocal compensation, are going to have trouble. But the long-term, serious players are going to be fine.

Q: Do you see any irony in the fact that USTA was founded as an association of independent carriers fighting the incumbent dominance of AT&T, but is now dominated by the incumbent Bells? In other words, the CLECs are in roughly the same position your members occupied a century ago.

A: I guess I take exception to the statement that Bells dominate USTA. There are only four Bells left. They are the largest companies, but I don’t think they dominate the policy process. The Bell companies came into USTA when they spun off from AT&T, but we have many other, smaller members, such as Alltel. The thing that bound them together was that the law treated them like incumbent carriers. About 300 of our members have CLEC companies. I think the marketplace is changing drastically. There are ironies that abound all through the marketplace. There are a lot of strange bedfellows in this industry.

Q: When do you think the Bells will have entered long distance in all 50 states?

A: All 50 states is a reach, because not all Bell companies are pursuing 271 relief in all states. Take some of the rural US West states in the western region. They’ve chosen not to, because the competitors aren’t there. But certainly in the major markets. I think the commission would certainly have to move to approve applications in the major markets in the next two years. Doing that is a painstaking process. Hopefully, the commission will start approving multi-state applications. Once you’ve got this testing stuff down, it can become a cookie-cutter process. I’m hoping we can see these things fall into place more methodically in the coming year.

Q: USTA just won the first court victory in recent memory against CALEA, the law requiring switch-level federal wiretapping. Is that victory enough? Are your members opposed to the mandated wiretapping infrastructure in principle, or to just the timetable and the financial burden placed on carriers?

A: Certainly we’re not opposed in principle. There has not been a court-ordered wiretap that hasn’t been successfully implemented, and our guys are pretty proud of that. It has to do with the timetable and the reimbursement. But we’re going to have to be extremely vigilant about this. We don’t expect the decision will save us money, but if we have to spend money we have a better chance of getting reimbursed.

Q: The big bottleneck in the developing broadband network is access. A fight is brewing at the FCC over the nature and extent of CLEC access to the new xDSL infrastructure. How much access should CLECs have, and where?

A: They should have everything that the ’96 act requires that they should have, and have it in due course. It’s clearly in the interests of the incumbent carriers to not violate the letter and spirit of the act. But a lot of this technology that’s going into the ground was not even envisioned in the act. They’ve got to have interconnection access, but some of the challenges to [SBC’s] Project Pronto were cases of them determining their strategy and dictating it to incumbent players. USTA pushed back on that, of course. We don’t think and incumbent should have to get approval from a CLEC before building out its network.

Q: You’re leaving USTA to join Al Gore’s presidential campaign. Gary Lytle (ex-Ameritech) is taking over. Are you stepping down for good? Would you take a position in a Gore administration if asked?

A: Today is my first day in the new role. I’m on a leave of absence for the duration of the campaign. In the short term, I’m going to be putting together the transition that has to be there after the election, win or lose. And it’s the structure Al Gore will use to choose a cabinet and organize his administration.

Obviously, you never say never. But my intention is to come back to USTA after the campaign. The USTA’s in good hands with Gary Lytle, and we’ve got a top-notch government-affairs staff.

I think we’re breaking up … I can call you again tomorrow …

[At this point Neel’s call disintegrated (we wonder who his mobile provider is), and he disappeared from the telecom radar into the relatively calm world of electoral politics. You’ll see the rest in the papers …]

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in The Net Economy.