The Bush administration has signalled it won’t oppose efforts by the Baby Bells to overturn laws forcing them to lease out their landlines at discounted rates – thanks to competition from mobile networks and other technologies.

In what has been billed by the press as a reversal in strategy, the Bush administration won’t oppose Verizon, BellSouth, and the other Baby Bells in their quest to overturn provisions of the 1996 Telecommunications Act that require them to offer landline rental to their competitors at extremely discounted rates.

Citing new kinds of competition from cellular, VoIP, and emerging hybrid Wi-Fi telephony solutions, the Baby Bells claim the industry landscape just isn’t as tied to their wires as it was in the 90’s, and that the Act’s requirement denies them of one of their only competitive advantages: landline infrastructure.

Critics of the proposed shift argue that phone rates will go up for tens of millions of US customers – both those who subscribe to Baby Bell competitors (who won’t be able to offer those compelling low rates) as well as customers of the Bells themselves (who will no longer have to offer competitive low rates).

So far, the media is misinterpreting the sense and impact of this case, calling it a reversal of earlier deregulation and a shocker for a free market advocate like Bush. But it’s not a re-regulation at all. Rather, it’s an extension of the slope towards deregulation that has been US policy for the past ten years.

The demand that Baby Bells offer their lines to others at non-competitive rates was a form of forced competition on a telecommunications infrastructure that lacked other means of connections between households. It was one of the otherwise deregulating Telecommunications Act’s few compromises to enforced fairness – a leveled playing field. Today, with cable, fiber-optic, satellite and, of course, a half-dozen cell carriers available in pretty much every residential area in America, this demand amounts to a regulation.

As for the charge that most landline phone rates will go up, time will tell. More likely, the Baby Bells are simply forcing their real competitors – those offering true alternatives to landline service – to compete using their own technologies.

May the best phone win.