Finger-Pointing SBC Cuts Jobs, Spending

complied to some degree and also lobbied and litigated to protect their markets.

Timing: It's Everything

After various rulings and appeals, the Federal Communications Commission recently established a pricing plan for how much the Bells could charge rivals seeking to offer service on their networks. The pricing rules roughly coincide with the timing of the state-by-state approvals to allow the Bells to sell long-distance service in their regions.

San Antonio-based SBC, for example, was just given preliminary approval to offer long distance in California, the largest state in its 13-state region.

"Under this pricing scheme, a century of regulatory policy has been turned on its head," Whitacre said. "Instead of subsidizing prices for average consumers, we now subsidize competitors who in turn siphon revenues out of the market."

While SBC has seen a decline in its total local lines -- largely due to customer flight to wireless service including SBC's Cingular business and cable modem Net access -- Whitacre's claims that competitors are skimming the cream of its customer crop may be overstated. Nearly all the telcos that could be seen as a threat to the Bells have failed or are teetering.

And that, of course, is the bigger problem: As the economy remains soft and prices remain weak, it's growing increasingly difficult for anyone in the telecom industry to make money.

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