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BellSouth Fans Fiber Flames

Make no mistake, BellSouth Corp. (NYSE: BLS) is happy with the Supreme Court's Brand X decision (see Supremes Sing Cable's Praises). But the RBOC is still waiting on positive news from the FCC so it can increase its fiber-to-the-curb coverage by “60 percent.”

The carrier hopes the Federal Communications Commission (FCC) will soon decide that RBOCs, not just cable operators, are exempt from sharing their broadband facilities with CLECs and competing ISPs.

BellSouth filed a letter to the FCC on Thursday encouraging the regulator to stick with its fiber-friendly rulings made in 2004. In the letter, BellSouth said it had increased fiber investment dramatically as a result of the FCC's 2004 order to allow RBOCs to build their fiber networks without having to share those networks with competitors.

BellSouth says the timing of its June 30 letter had nothing to do with the Supreme Court's Brand X decision, which stated that cable companies didn't have to share their networks, a possible precursor to telco deregulation. “Serendipity,” says BellSouth regulatory affairs spokesman Bill McCloskey. “There was a docket open at the commission, and yesterday was the comment deadline.”

BellSouth’s gesture is most likely aimed at prodding the FCC to give the RBOCs the same facility-sharing exemption the Brand X decision granted the cable broadband operators (see BellSouth Applauds FCC Order).

“We have hopes based on comments by Kevin Martin in The Wall Street Journal earlier this week that he now wants to get the commission rolling on equalizing the regulation between cable companies and ILECs,” McCloskey says. “The commission had a lot of things in the pipelines, and we hope that the Brand X decision will break that log jam.”

McCloskey cites BellSouth’s rollout numbers and projections to demonstrate that the RBOC's fiber deployments did increase after the FCC’s “fiber to the curb” ruling in October 2004. In that ruling, the commission says that fiber-to-the-curb is “functionally equivalent” to fiber-to-the-home.

According to BellSouth's internal numbers, the RBOC passed 97,000 new, or “greenfield,” homes in 2003 and 126,000 during 2004 (see BellSouth Picks Alcatel, Redback). The RBOC says it will pass 200,000 new homes by the end of this year, the increase being the result of the FCC’s FTTC ruling.

Skeptics say BellSouth's capital spending on infrastructure buildout is based more on competitive forces than on regulation. But regulation was definitely a player in the carrier's PR efforts on Thursday.

But what does the Brand X case have to do with the FCC's view on telco deregulation? The Brand X decision gives operators assurance that the FCC’s views about broadband won’t soon be overridden by a court. “It made it more clear to us that we could do this without having to go to the additional expense of sharing it with our competitors,” McCloskey says. "It just cleared the path."

— Mark Sullivan, Reporter, Light Reading




For more information on the services offered by the companies mentioned above, please visit Light Reading’s Ethernet Services Directory:

materialgirl 12/5/2012 | 3:08:40 AM
re: BellSouth Fans Fiber Flames The Real Deal is "We will build out a fiber network (some day) if you give us exclusive use of it."

Who can blame them? Who would sign up for the deal "We will build a fiber network so we can be commoditized to dirt and let people like Google walk away with all the money."

Unfortunately, for us to have open broadband, that is what has to happen. Regulators should be concerned about how to compensate broadband transport suppliers and not how to slice and dice "telecommunications" and "information", which are arbitrary categories anyway.

Otherwise, we will just disintermediate the lot (via WiFi and WiMax)and waste billions.
OldPOTS 12/5/2012 | 3:08:38 AM
re: BellSouth Fans Fiber Flames You can bet their lobyist are hard at work in Congress (Telcom Bill re-write) and the FCC. It appears that they assume the FCC may soon act based on the cable ruling, thus these comments from the Telcos and the advertisements from USTA - 'It doesn't matter how we deliver it, give us all equal oppertunity'.

OldPOTS
rjmcmahon 12/5/2012 | 3:08:35 AM
re: BellSouth Fans Fiber Flames Otherwise, we will just disintermediate the lot (via WiFi and WiMax)and waste billions.

What will next generations in the US do when they find out that Asia fibered up their continent and we're still fooling around with wireless for the "market" solution?

On a somewhat tangential topic, it's my understanding that Europe never deployed CATV like that done in the US. If correct, why not? And what have been the implications? (It seems like the direction the US is heading with respect to real broadband, i.e. being bypassed by other continents.)
fgoldstein 12/5/2012 | 3:08:33 AM
re: BellSouth Fans Fiber Flames rjm> On a somewhat tangential topic, it's my understanding that Europe never deployed CATV like that done in the US. If correct, why not?

Broadcast TV covered everyplace, so there was no need for rural cable as boostrapped the industry in the US. And satellite-to-home showed up faster there.

Now to disagree with MaterialGirl, as far as I'm concerned, I'd rather have 64 kbps of free-as-in-Speech (paid) Internet access than 10 Tbps of Walled Garden Evil "Broadband". The whole Internet principle is to allow connectivity among everyone. The network is merely a conduit for outside conduit. If the wire owner is pissed about Google's revenues, then they should compete with their own content. If they can't make enough money on raw transport, they should raise the price. The RBOCs don't only like the cable model of no ISPs. They seem to want to replace Internet access with "we control the horizontal, we control the vertical, here are 57 channels for you to watch, but the rest is pay per view or you can't have it at all".

In other words, their "broadand" is not broadband Internet at all. It's a big stinking load of WAP.
materialgirl 12/5/2012 | 3:08:29 AM
re: BellSouth Fans Fiber Flames "Now to disagree with MaterialGirl, as far as I'm concerned, I'd rather have 64 kbps of free-as-in-Speech (paid) Internet access than 10 Tbps of Walled Garden Evil "Broadband"."

Dear fgoldstein:
We agree. I am scared to death the FCC will grant RBOCs walled garden rights in exchange for fiber builds. A bad deal for sure.

Unfortunately, history has shown that the carrier cannot compete on content. MSFT showed us that in software and the oil industry (was it Rockefeller?) showed it us us in the 1900s. The term "common carrier" comes from rail regulation, where rail companies had to be forced to treat all cargo equally. The carrier must be common, AND reimbursed for what they deliver, for this to work.

Right now this is not happening. "Naked" carriers are going broke because prices keep falling to zero. This forces them to move "up stack" where they have no competence, and they also limit our choice. This is a bad deal, but the one the FCC is giving us right now.
materialgirl 12/5/2012 | 3:08:26 AM
re: BellSouth Fans Fiber Flames fg> The telcos grew fat as common carriers. The railroads are still common carriers. It doesn't matter if the carriers can compete on content, so long as they remain common carriers.

Dear fg,
That is where we must agree to disagree. I think the telcos got fat as monopolies, not as common carriers. That is why they bundled voice with transport. They need to be paid for their services, but "getting fat" implies to me monopolist pricing, not competitive pricing.

fg>Prices don't really fall to zero; that'a just a myth from the ideological factions. Prices, in a free market, fall to cost.

Check out storage. Check out DRAMs. Prices fall until cash goes to zero. What's when they go broke. That's what WCOM did. Negative gross margins, and complaints about unfair government subsidies, are common in the memory business.

The elephant in the closet here to me is that networks do not follow "normal" economics. Due to the cost and advantage of initial layout to all potential users, and the lack of economics of subscribing to more than one, a monopolist utility just makes the most sense. Look at the mess our airlines are in by pretending this is not true. Unfortunately, that beast will have to be regulated, and due to human nature being as evolved as it is at the moment, that never ends very happily.
fgoldstein 12/5/2012 | 3:08:26 AM
re: BellSouth Fans Fiber Flames mg> We agree. I am scared to death the FCC will grant RBOCs walled garden rights in exchange for fiber builds. A bad deal for sure.

I've been looking for a term for it. I'm toying with calling it "Fat wasteband, broadband Internet's evil twin".

mg> Unfortunately, history has shown that the carrier cannot compete on content. MSFT showed us that in software and the oil industry (was it Rockefeller?) showed it us us in the 1900s. The term "common carrier" comes from rail regulation, where rail companies had to be forced to treat all cargo equally. The carrier must be common, AND reimbursed for what they deliver, for this to work.

And it works. The telcos grew fat as common carriers. The railroads are still common carriers. It doesn't matter if the carriers can compete on content, so long as they remain common carriers. Note that the ILECs' finanacial reports show them losing money on their competitive ISP businesses (content), but making a lot on common carriage. At $30/month, raw wholesale ADSL is incredibly profitable. (It's much cheaper in Canada, where regulation is tighter; US carriers get to set their own rates without cost justification.)

mg> Right now this is not happening. "Naked" carriers are going broke because prices keep falling to zero.

Not true. The ILECs are doing great on the telecom part of DSL. Prices don't really fall to zero; that'a just a myth from the ideological factions. Prices, in a free market, fall to cost. Even common carriage prices.

mg> This forces them to move "up stack" where they have no competence, and they also limit our choice. This is a bad deal, but the one the FCC is giving us right now.

They aren't forced to move up stack. The FCC is letting them, but not because it's in the public interest. Content-controlled monopolies are better for the monopoly carriers and better for the regime that empowers them. Ni hau ma?
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