Rumored FCC changes will lead to "a decade of lawsuits" for DSL services

DSL Prime News ^ | January 30, 2003 | Dave Burstein

[HAL9000]

DSL Prime News: The Inside Source

A leak from the FCC says a deal on line sharing has been reached because the RBOCs are about to build fiber, and therefore no longer hate sharing their outdated copper networks.

"The Bells are about to build fiber, and that explains the coming FCC decisions."
-- Leak from the top of the FCC

Powell is apparently cutting a private deal with Seidenberg and Whitacre. He will give them less competition, and they will promise to build out a fiber or VDSL network. Powell hopes to change a public relations disaster into a dream of a brighter future. Verizon's Link Hoewing in the Globe wrote of optical futures and "high capacity with a flexible data network connecting all homes." Never underestimate the telcos' $300 million communication and public policy budget -- they know how to shape a public debate.

Sounds good, so far. Press releases aren't real service, however, and we all know the Bells promised a fiber build in 1996 to get the Telecom Act passed. Unfortunately, "everyone" in telecom is laughing at the thought the Bells will go to fiber soon, and the proposals circulating at the FCC won't accomplish the goals Powell, Abernathy and Martin share. (I hope "everyone" is wrong, of course.)

Meanwhile, Kevin Martin says the Chairman has not done the work to protect line-sharing. Read the court decison, not the news reports, and you'll see the FCC has to consider issues like cable competition, and then can rule based on the evidence. They now have thousands of pages of testimony on those points, and any FCC lawyer can justify linesharing with a couple of days' work. Independents have less than 10 percent of consumer broadband with line sharing. The 90 percent+ telco/cable duopoly has produced U.S. prices 25-60 percent higher than other countries. That's a textbook example of insufficient competition.

The last draft of the new regs I saw aims at a high speed build but is full of loopholes. It will not deliver fiber to any significant number of consumers before Powell gets his chance to run for Governor of Virginia. One problem is that the equipment the Bells are already buying -- Alcatel DSLAMs, AFC and Alcatel remotes -- have already been redesigned to allow an upgrade to fiber. Sensible telcos are demanding the new designs, wanting some future flexibility. It can easily be defined as "fiber grade, capable of delivering 50-100 Mbps" -- and destroy the unbundling and sharing requirements. An early draft thought DSL speeds were currently limited to 1.5 Mbps, when all the equipment is designed for 7 Mbps already and the new chips are delivering 12 Mbps to hundreds of thousands in Japan. Language in pending proposals is so ambiguous as to invite a decade of lawsuits rather than actual delivery of services.

I know some damn serious people at the top of the telcos are trying to find a way to deliver a faster internet. They want to be ready if the Technet crowd persuades D.C. to subsidize technology giants like farmers -- or if cable competition gets rough. Comcast has phones in 30 percent of the homes passed in Orange County, and VOIP is working.

Linesharing: FCC has the data to protect it

Thanks, Kevin Martin, for pointing the way

Jason Oxman, Tom Koutsky, or some other competent CLEC lawyer: drop whatever you're doing tomorrow, and write a brief for the D.C. Court on FCC line sharing. Then send it out to the press (I'll lend my list) to make clear the court has not ordered the commission to eliminate line sharing. Folks who want to kill competition are spreading a lie in D.C., that the court ordered the FCC to end line sharing, and unfortunately some press reports picked that up. The language of the D.C. Circuit remand says nothing of the sort. The FCC was ordered to consider several issues, like competition from cable, but the order is clear: as long the FCC considers these issues, including cable competition, the commission can decide based on the record.

The Triennial gives a full record on that issue, clearly carefully considered by the FCC. Commissioner Kathleen Abernathy knows that ending line sharing kills consumer DSL competition, and she's promised the surviving CLECs she won't force them out of the business. I hope she delivers.

Copyright 2003 Dave Burstein.

[HAL9000]

If these predictions are accurate, the United States will be a decade behind the rest of the industrialized world in deploying DSL and it will be twice as expensive.

Even some third-world countries will pass us. It will be a shame if China gains a huge technological and economic advantage over the US, thanks to the Bell companies and the FCC.

[HAL9000]

Let me rephrase this slightly -

...the United States will be a decade behind the rest of the industrialized world in deploying DSL broadband...

[Bogey78O]

Third world countries have only one phone company and there's no competition. Figure it out.

[Arkinsaw]

Doesn't bother me, I have cable.

As for rural areas, we have the "New Deal" era Rural Utilities Service (inheritor of the Rural Electrification Agency) that offers zero percent loans for companies to "electrify" rural areas. Looks like this 'New Deal" program should have already established a working high quality broadband network for these rural areas....LOL.

[Blueflag]

Hal --

There are many ways of getting hi-speed internet access in the US, fixed or wireless, particulary to those neighborhoods likely to buy the service. I live in Bellsouth territory which is very much a fiber-to-the-RT company and I'm almost certain is 100% fibre inter-office/CO. My neighborhood is 10 years old and I am 'passed' by dark fiber (available to an alternative provider), cable-TV, IFITL/DSL (Fiber to the post) and DirectWay DSL. BellSouth, the IXCs, COVAD and others offer DSLAM, ADSL, and SDSL, ATM, Frame relay, etc., etc. Local businesses within a mile of my suburban home can get OC-3, T-1, etc. Local businesses also have quality bypass offerings and alternative local service providers for voice and data. Very few residential users *need* 10/100 mbs QOS. Business can get it. I could get a T-1 at my house (or several) if I paid the business tariffs. You likely could too.

No one is getting left behind here. hi-speed service with an ISP account costs me only $44/month.

What's my point?

There are many ways to get hi-speed service in the US at reasonable prices. Folks who have the need and the $$ are not denied by a lack of infrastructure, generally.

I don't see an issue here and like the competition in the market.

Those are my thoughts, I welcome yours.

[Blueflag]

BTW, I am 27 kilofeet from the CO, my voice line is SLC, and yet I still have five viable options for 'high-speed' internet access.

At our place in the Smokies, I am 76 kilofeet from the CO, 2 miles from the RT and use dial up ...

A Directway dish is in my future there!

[HAL9000]

Third world countries have only one phone company and there's no competition. Figure it out.

This is America, and we can have both superior technology and free market competition. The Bells and the FCC should figure it out.

[PFKEY]

the United States will be a decade behind the rest of the industrialized world in deploying DSL and it will be twice as expensive.

Had DSL and wasn't really all that impressed. My cable is cheaper and faster. But I've heard stories that people have experienced just the opposite.

[Quicksilver]

I live in smalltown USA, population 20,000. We have 2 broadband cable service providers, one by the TV cable and the other by the local utilities board, and we have 2 DSL service providers. Competition is wonderful.

[Petronski]

I have DSL service (within a mile of the phone company's facility) with ALLTEL and love it (need it). Is this change--which I'm embarrassed to say I don't understand--going to effect the DSL installed base?

[Bogey78O]

So what does that tell us about viable Telco business models?

We had superior technology and the worlds best phone system. But then something happened. It all went downhill after 1985 and took a nosedive in 1996. What could have caused that I wonder?

[highpockets]

Hide behind the word competition all you want.

But under the 1996 Act the REBOC's sell their service to others who have no business plan to build their own networks ever. It is a process that allows one company to use the equipment and services of another without ever being required to build their own system.

If you think it is fair, let me pay 50% of any car payment you currently have, you pay for all maitnenace and operating costs, and I get use your car 100% of the time.

That is what is really going on.

[Quicksilver]

I forgot to mention that we also have at least 2 wireless internet service providers.

[HAL9000]

There are many ways to get hi-speed service in the US at reasonable prices.

You are fortunate to have so many choices, but most people don't.

I had an ISDN line for a few years, but cancelled it a couple of years ago. It was $400 per month for 128 kbps because I had to lease a 40-mile circuit. It was extortion, but it is still the only option here in SBC Southwestern Bell territory. (The cable company doesn't offer broadband either... but that's another story.)

The vast majority of people here are connected at 28.8 kbps, and can't afford hundreds of dollars per month for ISDN speeds that are grossly inferior to DSL. The infrastructure here is rotting away. The Bells promised to build new infrastructure when the 1996 Telecom Act was passed, but failed to do so. Now they are demanding an end to competition before they will keep the service on par with the rest of the world.

We need broadband service that is reliable and affordable if the U.S. is going to maintain our economic and technological advantage against overseas competitors. We need both intermodal and intramodal competiton to make it work here.

[HAL9000]

But under the 1996 Act the REBOC's sell their service to others who have no business plan to build their own networks ever.

Sorry, but you're wrong.

The plan for competitive local service is the same as the plan for competitive long distance service that started several years ago.

The competitor starts by leasing wholesale service from the entrenched monopoly, builds a customer base, then installs their own equipment. This will work for competitive local service networks, including the switch, except the last-mile which would be wasteful to duplicate. Overbuilding the last mile makes no economic sense, and nobody wants ten more cables running through their yard. So that last-mile natural monopoly must be available on a non-discriminatory basis.

Do you remember when long distance used to cost $1.50 a minute under the old AT&T monopoly? Thanks to competition, it's a lot cheaper now, and the same thing can happen for local service.

[highpockets]

No you are wrong.

How does a company which only hires sales personnel and accounting ever build their own network.

You are clearly knowledgeable about this matter and must know what I am talking about or are simply towing the line.

When a CLEC does not have repair/construction/engineering how in the hell can they ever build their own network?

[Bogey78O]

'Do you remember when long distance used to cost $1.50 a minute under the old AT&T monopoly? Thanks to competition, it's a lot cheaper now, and the same thing can happen for local service.'

Wrong. Intracompany subsidization is why local service was cheap. Sure you paid 1.50 a minute but local service ran you all of 6-8$ a month.

Competition had zilch to do with the cost. The actual cost of LD was cheaper than the bells sold it for. After the divestiture the consumer started to pay the actual cost which is why it fell.

If the residential consumer paid the actual cost for his service (sans subsidization from the business end) then they'd be paying even more.

That's why CLECs pick off business subscribers and care less about residential customers. Because they go for where the profit is. Th only reason why they even bother with residential customers is because of Federal control of prices they can gleam a profit by underselling Bell.

And if you want a true model of free competition we'd see the local customer get dropped like Democrats on 11-7-02

[Ramius]

Actually, broadband deployment is happening faster than many ever predicted. It'll get there. But the truth is, DSL and Cable broadband are merely short-term technologies to get us past the current phase. They aren't the final answer.

The only place that the rest of the world is surpassing us is in wireless buildout. China, for example, is building out a first-rate wireless infrastructure. It's not complete but when it is it'll be far better than ours.

Big deal. It's newer, so it's better. They have no investment to speak of in copper infrastructure. We're still having to support all this copper, and they're leap-frogging to wireless *instead* of going to copper.

LEC's in this country are going to be ultimately forced to go to an all-wireless solution too. Spread Spectrum is the way to go. That's when we'll have ubiquitous broadband. The answer isn't more copper and it isn't fiber-- especially for the last mile.

At my headquarters office I've still got a couple of T-1's for Internet, but they're there mostly for failover and load balancing. What really shines is my shiny little 5.8Ghz pizzabox-on-a-stick that gives me up to 4Mb symmetric for only $500/mo. With a phonecall in a matter of minutes it can be 10Mb for $2500/mo. That: just plain rocks.

Part of the coming problem with telcos that I can see is everybody wants bandwidth but nobody wants to pay for it. The tier-1 providers are losing their T1/T3/FrameRelay customers by the bushelful, but what happens to the locals when there aren't any tier-1's anymore? Hmmm

[highpockets]

And without regulatory change

why would they?

Because of their good hearted nature and desire to be competive?

They are in business and remain in business to make a profit.

Just as all Americans are

The only reason their model works is because of unfair regulatory manipulation.

Not because of a valid model.

A model dependent on that bias.

One which would fail in a truely competive environment.

[Karsus]

That our local telco invested too much money in overseas ventures and not enough in expanding there highspeed offerings in the USA?