Special Access and a Smart Policy (Part II)
January 28, 2010
As I read through a recent 127 page FCC filing on special access, it reminds me once again, that various CLECs do not recognize this 14-year-old business model has not worked well historically. Two points in the filing stood out and really irked me—the arrogant CLECs’ demands that ILECs lower rental costs (because the market prices are declining) and that ILECs increase the amount of bandwidth on special access services at a lower price. My response is an enthusiastic, “Hell NO!”
In short, this filing illustrates that demand for organic broadband is growing and the CLECs rental model can’t meet the demand without their largest competitor subsidizing them. This filing is asking the FCC to regulate the costs of ILECs to increase the margins of CLECs in a marketplace where organic demand for bandwidth demand is exploding. A friendly reminder from the cheap seats—it has been 14 years since CA 1996—do we really need 14 more years of beltway gamesmanship when viable non-ILEC wireless and wire line technologies and service providers are available and waiting for the wholesale business? The blight that is portrayed in the filing is not as bad as it is presented. CLECs just don’t like to work with other CLECs and would rather spend money lobbying the beltway. The big picture has clearly been missed for the past 14 years and I ask Congress to stop the insanity.
Think of the audacity of this filing. It is clearly lacks the intention of advancing America’s strategic broadband interests not only in commerce and public safety, but also in national security. In14 years, a carrier could not, did not, or purposefully avoided gaining independence from the ILEC.
My Seven Point Policy Plan for Congress and the FCC is outlined below and designed to advance America’s strategic interests in broadband deployment. Sorry FCC and Congress—I don’t agree with your measure of broadband:
1. Recognize the goal of 100 megabits of connectivity synchronously where economically feasible within five years and 1 gigabit in ten years for 80% of America. The technology and capability already exists but the capital does not. For remote rural areas, try a USF based satellite service because building out to the most rural of rural areas makes zero economic sense. A satellite system will work—call Matt Desch, CEO at Iridium or look at what they are doing in Australia in serving the Outback via satellite.
2. Attract private capital into expanding fiber optic networks by offering a clear concise policy. Private capital learned a nasty lesson the last time following Wall Street and rental models. By showing certainty of direction and discipline, the funds will flow.
3. Put a sunset provision on renting pieces and parts from the ILECs after five years (I am being generous after watching the last 14 years). After five years, ILECs still must make the pieces and parts available but they would be free to set prices and volumes for an additional three years. That gives clarity and the CLECs eight more years to contemplate their strategy. In total, CLECs will have 22 years to figure things out—I think that is long enough.
4. After the eight year provision outline in #3, the ILEC can withdraw rental pieces and parts from service with 90 days notice. It is unfair an ILEC has to endure the costs of running a legacy rental network and state-of-the-art fiber networks (i.e. FIOS).
5. On special access, leave the regulations as is and set a two year sunset provision on special access pricing being regulated and two additional years before the ILEC can withdraw the service with 90 days notice.
6. Grant a two year window on the consolidating companies that are facilities based where they get 100% Net Operating Loss (NOL) credit. This window would be conditioned that, upon taking the 100% NOL, the buying party must make the acquired assets open on a wholesale basis for dark fiber leases, waves, last mile access and other wholesale services on a non-discriminatory basis. Why does this one make sense? It will attract capital from the private sector for network infrastructure expansion, get customers off of Ma Bell…and force the FCC and Congress to admit that what we have today is a duopoly between Ma Bell and the Cable Company (based upon a concept of “modal” competition).
7. I have more … just give me a call.
Let me tell you again, I really don’t like being that broken record but enough is enough! I believe the 22 years under my proposed plan is more than fair.
Just thinking aloud…could you imagine if I became an FCC Commissioner? I can’t but it could be fun. As a Commissioner I would write my own daily posts, laying things out as I see and hear them. Perhaps, they would call me Mr. Transparency and my “Not for Sale” sign outside my office would be a reminder, too. So much for fantasy!
# # #
One final thought for the day—something I noticed while writing this post. Did you know that “ILEC” under Microsoft spellchecker returns a typo with the suggestion, “Lies?” I wonder if Bill Gates had his hand in this one for all you conspiracy theorists!
Written by Dave Rusin - Telecom Executive
Posted by wbrache | Filed Under Dave's Corner, Telecommunications industry
(No Ratings Yet)
Loading ...Comments
4 Responses to “Special Access and a Smart Policy (Part II)”
Got something to say?
Feeds
Dave, great observations. There really has been little coop amongst CLECs. Thus far its all been a race to zero while the ILECs continue to dominate market share at higher price points for the same services. Something wrong there for sure! Most “facilities-based” CLECs need to take a hard re-look at their biz plan and realize that they need to invest in alternate transport technology i.e. wireless, fiber or just call it as it may have made sense from 96 to 2007 but the world has outgrown the performance of copper. Meanwhile most major ILECs in the US have made it public that they are looking to walk from copper and TDM services. It seems that right now ILECs are the ones innovating while traditional CLECs are hanging on to the past. If mid-size enterprises (50-1000 employees) are buying T-1s or bonded T-1s its either because they have been mislead, are misinformed (i.e. not doing their homework as to options) or they are in one of the truly under-served parts of America that could benefit from a real Broadband plan and that’s where the Feds really should focus their attentions.
Dave, Special Access is buying circuits off the tariff. UNE is unbundle elements – copper pairs – that CLEC’s buy from between $12 and $275.
The Special Access docket is DA-09-2186A1. I think you are ranting about Covad, Cbeyond and the other CLEC’s petition for cheap wholesale access to fiber systems.
I explain more on my blog: http://radinfo.blogspot.com/2010/02/telecom-straight-shooter-reply.html
I dfon’t rant — the ranters are the “renters” — notice the one letter difference.
Bottom line: it’s been 14 years since CA 1996 — if uyou are not on your own by now – you should die from natural causes. My opinion, 14-years — it’s not an ILEC issue.
Do we need another 14-uears of the same? Almost three decades?
Give me a break. Don’t confuse ranting with renting or reality — it’s time to sunset the CLEC arbitrage game.
Peter Radizeski:
I visited your blog. I have no intention of joining Google anything in order to post a response. GMail — goes down for 36 hours — reason 1 … net neutrality advocates to crteate competitive entry … I could go on ….
But here it is: I am not anti-CLEC, I am anti-14 years of sitting on their ass and complaining to the FCC and whomever. They go to court and lose. Complaining and corporate welfare — something we do very well in America.
Get off the public or ILEC dole.
Here is another thing that has toated my ass on occasion — your beloved CLECs won’t buy from an established third party unless they are cheaper in price than the ILEC! So they would rather dance with the devil (whine as well) and not fund at the same price an alternative infrastructure carrier who can expand in order to ween themselves off the ILEC. This type of thinking — a company deserves to die.
My grind is for this country – we are woefully behind in capacity and keeping inferior, 100-year old copper infrastructure in play for another 14-years is not the answer in a global economy.
Dave Rusin