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A Telecom Capital No Longer

By Jerry Knight
Monday, February 21, 2005; Page E01

Washington's days as the center of the telecommunications revolution are over.

MCI Inc., the inventor of phone competition, is being courted by two of the former Baby Bell phone companies. Whether MCI hooks up with Verizon or Qwest doesn't matter. In either case, it'll be the corporate equivalent of marrying the enemy.

(Xm Satellite Radio)

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Nextel Communications Inc., whose walkie-talkies wiggled into the mobile-phone business through regulatory loopholes, is merging with Sprint Corp., the biggest communications company outside the former Bell family.

American Online Inc., which literally put America online, has become little more than a sideline for the multimedia moguls of Time Warner Inc.

The Washington region still boasts a dozen-and-a-half publicly traded telecommunications companies, but only a few of them have made money for their shareholders over the past year.

What once was the region's most promising growth industry has been largely reduced to a few struggling providers of phone and Internet services -- more mom-and-pop than Ma Bell -- and some small suppliers of hardware and services to the big boys.

Why did Washington lose its leadership role?

Because Washington has lost its relevance.

Government regulation made Washington the birthplace of competition in communications, but the era when regulation determines who can provide what services to whom is past.

"Telecom World War I is over," said Scott C. Cleland, chief executive of the Precursor Group, Washington's best-known telecom think tank. "This is the formal end to the era of managed competition" under government communications regulation.

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