History Repeats Itself, Yet Again…
June 30, 2009
For those of you reading this blog with Enterprise interests, I apologize. I need to once again address the senseless efforts by non-ILEC carriers via the FCC when it relates to Forbearance filings.
I wrote about Forbearance Petitions extensively in the latter half of 2008–please visit the Telecom Straight Shooter Blog Archives for a refresher.
Today I read in the Wall Street Journal that–after being denied Forbearance Relief by the FCC in 2007–a federal appeals court has once again told the FCC that you were wrong in denying said Forbearance. This is not the first or last time the FCC has lost in court versus an ILEC at the urging of CLECs, if I were keeping count there has been scores of losses. The ILECs just might be undefeated.
This time Verizon won in court. They want relief to raise wholesale prices to those carriers that rent (leach) off of them in Boston, New York City, Philadelphia, Pittsburgh and Virginia Beach, Va. Take a look at the size of these markets – there is plenty of competition and that is what Verizon stated in their denied petition by the FCC in 2007. A few years later, lots of lawyer$, and what do we have? Go look at it again, Mr. FCC–and this time apply the standards under the
Communications Act of 1996 and as amended! History just repeating itself! Definition of insanity anyone?
Here is the bottom line since 1996: CLECs why are you fighting to give money to your largest competitor to rent their legacy copper facilities or special access as they deploy fiber optics you can’t have access?
Why do you enjoy funding your largest competitor and all those back office costs to “bond” with them? Why are you jacking up their IRR’s on legacy facilities to the benefit of the ILECs share owners and not yours? What is this OCD in repeating over and over and over the same arguments with the FCC only to get taken out to the wood shed for another butt whipping by the Federal Court?
For god sakes, you have had 13 years to figure out how NOT to do business with your largest competitor but somehow the legacy crack cocaine they have you on is irresistible.
I would like a few CLECs to go add up all their ILEC rental fee’s paid since 1996, lawyer fee’s for arguing with the ILECs, lawyer regulatory filing fee’s, fee’s paid to lobbyists, political party contributions, ILEC related back office capital & expense, cost of churn, the loss of goodwill when Ma Bell did not perform and you got the black-eye plus 6% annual interest. Now, look at this number and try to figure out how you could have spent the cash to compete differently with
Ma Bell and what your returns might have been using this cash as capital for hard, fixed assets that you own and hold on a balance sheet. And, oh yes, this disciplined approach would have required planned growth, not just top line growth like the Real Smart Guys on Wall Street advocated.
I don’t know of any rehab for OCD-related CLEComania that can’t get off the ILEC’s legacy crack cocaine. As every day goes by, and we are witnessing bandwidth exploding for real (not like Wall Street said back in 1999-2000 — remember those Real Smart Guys?), the ILEC legacy
infrastructure is not and can not keep up. Even crazy AT&T is rethinking U-Verse aka Fiber-To-The-Pedestal (FTTP) and Cable Companies remain in denial that coax is not robust enough to be competitive. Wireless is not fiber, it has its access niche in more remote areas.
So, with Verizon’s latest win on behalf of ILECs everywhere, it’s just history repeating itself once again.
It’s time to get off the hamster wheel and out of the cage the ILECs watch you conduct business from as their personal economic experiment of legacy return rates continues only to be accelerated by future/additional Forbearance Petitions being approved.
The only people making money out of this legacy model are Ma Bell, the lawyer$ and lobbyists.
Written by Dave Rusin - Telecom Executive
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