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Optical/IP

Bells Challenge FCC Ruling

They say that death and taxes are the only real certainties in life, but a legal challenge against a Federal Communications Commission (FCC) ruling must surely be in the same ballpark.

A week after the FCC finally spewed out its 576-page Triennial Review document (see FCC Rules Out!), BellSouth Corp. (NYSE: BLS), Qwest Communications International Inc. (NYSE: Q), and SBC Communications Inc. (NYSE: SBC), along with industry organization the United States Telecom Association (USTA), have gone to court to challenge the FCC's decisions (see USTA, RBOCs Challenge FCC).

They have filed their grievances with the U.S. Court of Appeals for the District of Columbia in a bid to kill off the UNE-P ruling, which obliges the regional Bell operating companies (RBOCs) to provide competitive service providers with discounted access to their networks. The fourth RBOC, Verizon Communications Inc. (NYSE: VZ), is set to follow suit with its own petition soon.

To get the details on this legal challenge, read the full story on our sister site, Boardwatch. — Ray Le Maistre, International Editor, Boardwatch

lastmile 12/4/2012 | 11:29:38 PM
re: Bells Challenge FCC Ruling "The four RBOCs had been hoping the FCC would scrap the UNE-P rules as part of the Triennial Review. Instead, the FCC handed the decision on whether UNE-P should remain to the 50 individual states. The Bells claim that providing cheap access to their competitors costs them hundreds of millions of dollars each year in lost revenues."

The FCC has done a lot for the RBOC's. They have deregulated broadband almost completely. The RBOC's are losing landline customers at an alarming rate -
thanks to the UNE-P rules. These rules are a result of the 1996 telecom act.
Instead of fighting for survival with an obsolete system like POTS the RBOC's will do good if they try to compete with cable and offer some kind of "triple play" that is superior to the product that cable offers. It is the customers that will decide the furure of the baby bells. If the fight over UNE-P rules continues for another two years or more then the baby bells will lose almost all their customers and they will go out of business.
But the Bells are hoping that the UNE-P rules will be reversed in their favor. That will never happen.
telebud 12/4/2012 | 11:29:38 PM
re: Bells Challenge FCC Ruling Wonder how many Congressman RBOC'S have in their
back pockets.
This is the reason why there is not 'cheap'
cell phone rates in US like Europe.
We have too many legislatures getting their
pockets greased they don't want a more competitive
market. It still the good old boys game and they
want to keep it that way.
>>>What the 4 RBOC'S are hoping for:
The four RBOCs had been hoping the FCC would scrap the UNE-P rules as part of the Triennial Review. Instead, the FCC handed the decision on whether UNE-P should remain to the 50 individual states. The Bells claim that providing cheap access to their competitors costs them hundreds of millions of dollars each year in lost revenues.
splitEndz 12/4/2012 | 11:29:37 PM
re: Bells Challenge FCC Ruling re: "The Bells claim that providing cheap access to their competitors costs them hundreds of millions of dollars each year in lost revenues."

Yeah, competition tends to do that. You don't have a competitively priced product so you lose revenues to competitors who do.

Cable telephony, wireless, and cable internet are costing them hundreds of millions in lost revenue too, except they can't sue to get that changed.

Besides, if the access they are forced by law to provide is so cheap (which was rebuffed by the supreme court--end of discussion), why aren't they competing out of region against other RBOCs? Their claims essentially state that it would be more profitable for them to do so.

re: "If the fight over UNE-P rules continues for another two years or more then the baby bells will lose almost all their customers and they will go out of business."

Doubtful. Technology adoptions and change take a long time, not to mention the switching costs. RBOCs are in no danger of going out of business. Everybody is losing some business in today's environment so welcome to the club, RBOCs.

I think a majority of the population is not yet willing to hand over their phone service to the cable MSOs. As several people have pointed out, the RBOCs only need to decrease the price of their local phone service so it is competitive with cable, to halt defections to cable. Since they have not done this, they must not feel as threatened by it as analysts and the press claim.

I think they believe the cable MSOs are losing their ass on cable telephony, since the cable MSOs do not collect the access charges and they give away the custom calling features (which are where RBOCs make most of their profit on local phone service). I think they simply ask:

1. how much would we lose if we lowered our basic local phone service price for everybody (residential) and gave away some custom services free (e.g. caller ID, call fwd), to match the cable MSO offering

versus

2. how much would we lose to defections to cable if we do nothing, and do we believe cable is really able to make a sustainable business case out of telephony.

If they believed #2 was greater than #1 they would lower prices.

rjmcmahon 12/4/2012 | 11:29:36 PM
re: Bells Challenge FCC Ruling If the access the [RBOCs] are forced by law to provide is so cheap, why aren't they competing out of region against other RBOCs?

The obvious answer is that "regulated competition" is a sham. Our networks are being used by oligarchs to milk the public out of more of our money. The feigning of competition is critical to their status quo game.

I think a majority of the population is not yet willing to hand over their phone service to the cable MSOs. As several people have pointed out, the RBOCs only need to decrease the price of their local phone service so it is competitive with cable, to halt defections to cable.

This reasoning "takes the bait". There is no real competition between the RBOCs and the cable cos as their is no competition between the individual RBOCs. (This issue of Business Week makes similar mistakes)

It's all regulated monopolies posing as competition so they can sell equity shares on Wall St.

Structural separation is required if real broadband is ever to come into existence.
telebud 12/4/2012 | 11:29:36 PM
re: Bells Challenge FCC Ruling "It's all regulated monopolies posing as competition so they can sell equity shares on Wall St".

While I would agree with that statement. The
government wants consumers to believe they have
competive choice.
But in Business I know about 'competitive advantage'which the local RBOC's have and want
to keep. It's only an ADVANTAGE for RBOC's.

We won't see cheap cell phone services rates like
Europe for 3 to 5 more years.
What the RBOC'S are in agreement on is to keep
things STATUS Quo.
fgoldstein 12/4/2012 | 11:29:33 PM
re: Bells Challenge FCC Ruling > I think they believe the cable MSOs are losing their ass on cable telephony, since the cable MSOs do not collect the access charges and they give away the custom calling features (which are where RBOCs make most of their profit on local phone service).

Huh? On the calling features, it's just a matter of how you describe it -- cablecos and other CLECs wisely put together bundles of basic and premium services, where the premium features cost nothing anyway, but the base price is sometimes higher. Cost-based pricing is usually a good idea in a competitive market, something the ILECs don't grok.

But on access charges, the MSOs as CLECs are certainly entitled to the same inflated Switched Access charges that the ILECs collect; temporarily, even more. The monthly fixed access charge is just part of the retail price, and the cablecos can set their retail price wherever they want.

I'm surprised the cablecos have not been more aggressive with telephony. I've used cable telephony (Tellabs 2300, formerly "Cablespan", gear installed by what wss then MediaOne) for over four years, and it has worked very nicely. I've been looking at some PacketCable opportunities with clients. While the IP-ishness of it may slighty degrade performance compared to Cablespan, it still looks like a very good system, quite cost-effective once you have the CMTS in place and not too many homes/node. There are even PacketCable "modems" with built-in batter backup nowadays.
alchemy 12/4/2012 | 11:29:29 PM
re: Bells Challenge FCC Ruling fgoldstein writes:
I'm surprised the cablecos have not been more aggressive with telephony. I've used cable telephony (Tellabs 2300, formerly "Cablespan", gear installed by what wss then MediaOne) for over four years, and it has worked very nicely.

The problem with constant bit rate cable telephony (proprietary HDT solutions from Arris, Tellabs, and ADC) is that you need to go buy a Class 5 switch to sit behind the HDTs. The access points are line powered so the MSO has to deal with the expense of running AC power down the Coaxial plant. They typically have to run a SONET ring from the head ends to the Class 5 switch so they're also buying a lot of add/drop Mux gear. This is a huge capital outlay before they can sign up their first customer. That limits the solution to dense population areas and MSOs with strong balance sheets.

I've been looking at some PacketCable opportunities with clients. While the IP-ishness of it may slighty degrade performance compared to Cablespan, it still looks like a very good system, quite cost-effective once you have the CMTS in place and not too many homes/node. There are even PacketCable "modems" with built-in batter backup nowadays.

It's tough to detect any performance difference between constant bit rate and PacketCable as long as the sample rate for PacketCable is configured to 10 milliseconds. PacketCable runs a dynamic quality of service protocol so the CMTS polls the cable modem every 10 milliseconds looking for a packet. (This is called unsolicited grant service.) Jitter and dropped packets don't happen. Delay is minimized. Homes/node contention with vanilla web surfing traffic isn't an issue. At the moment, the problem with the plant is that the upstream pipe is very limited. DOCSIS 2.0 fixes this by adding symmetric upstream but only Terayon has a DOCSIS 2.0 CMTS so far. The Broadcom chip set is very late and Cisco, Motorola, Arris, and ADC won't have product until Broadcom delivers. I'd look for a lot of last generation Cisco CMTS gear to get replaced with carrier class DOCSIS 2.0 equipment next year. As far as I know, Cisco doesn't have a redundancy story for their CMTS product line so their 80%+ market share installed base may start eroding.

The biggest issue that hasn't been dealt with by the MSOs is how to engineer the five 9's IP data network required for primary line voice services. I think that video on demand is going to drive the network design. The pipe is huge and people will be pissed if they're paying for VOD and the service fails. Most of the streaming video people seem to be putting their chips down on resilient packet ring over Gig-E or 10Gig-E (IEEE 802.17). You wire up the head ends with 10Gig-E RPR rings and run VOD gear and CMTSs off subtended GIG-E RPR rings from packet add/drop muxes. In the home, the set top box will be getting an integrated DOCSIS cable modem and will offer services like IP streaming video, 802.11 wireless LAN, and cordless telephony.
billy_fold 12/4/2012 | 11:29:28 PM
re: Bells Challenge FCC Ruling So the RBOCs want to repeal UNE-P. Do they also want to give up the wireline long distance that was coupled to them opening up their local networks competitively? Answer: NO


-billy
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