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DEC 4 ,1990 BOOK ", I ,1u ' * "If the Bell companies were allowed to manufacture and purchase equipment from themselves, they could drive many small manufacturers out of business and generally impede competition in the equipment market. By developing equipment with insider knowledge of their own network growth projection, configuring their networks to make equipment uniquely suited for their specific infrastructure design, and by spreading ,research and development (or other untraceable) costs into the regulated ratebase, the Bell companies could easily circumvent the most diligent regulatory policing and foreclose major equipment markets from competition." The following is an excerpt from a "News Release" from the Independent.Data Communications Manufacturers (IDCMA), the North American Telecommunications Association (NATA) and the Telecommunications Industry Association (TIA) regarding this issue: "U.S. manufacturers are top competitors in an increasingly competitive global marketplace as a direct result of the nature of competition in the U.S. marketplace, which is itself a direct result of the Bell System divestiture which severed a vertically integrated telecommunications monopoly. Allowing the RBOCs to manufacture would reduce competition in the U.S. market as these companies turned inward for equipment purchases from captive/affiliated manufacturers, rather than relying on competitive bidding from unaffiliated manufacturers. This in turn would reduce the global competitiveness of U.S, manufacturers, as they rely on RBOC business to provide the economies of scale needed to compete internationally. There would be a net negative effect on U.S. global competitiveness in telecommunications equipment if the RBOCs are allowed to manufacture." The point is that there are no regulatory safeguards, short of anti-trust litigation, to prevent anti-competitive practices. Therefore,the restrictions of the Modified Final Judgment which prohibit the Regional Bell Operating Companies from providing vertically integrated research, development and manufacturing of 'the telecommunications equipment used in their monopoly exchange telephone service are the only way to provide a "level playing field" for all competitors. It is.impossiple to discuss all of the aspects of this extremely complex subject in a letter. However, it is my hope that I have.provided enough information to indicate that this is' an apolitical complex technical issue that must be resolved at the highest levels of government. It is,requested that this letter be made a part of the record.of the Board of County Commissioners' meeting in which you discuss this resolution. If public comment is allowed, I would appreciate having the opportunity to discuss the issue. Sincerely, Bal C. C. Kleckner 42