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Copper or Fiber? CLECs Want Access to Both

Carol Wilson
3/16/2010
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NASHVILLE -- Fiber may be the future for much of the telecom network, but copper lines are as valuable as ever to many competitive service providers, and that fact is creating competitive tensions that reach all the way to the Federal Communications Commission (FCC) .

Some CLECs are angry at the prospect that incumbents may take copper lines out of service and therefore deny competitors the right to buy access to those facilities at a time when technologies such as copper-bonding and Ethernet-over-copper are extending the useful life of the legacy network. Incumbents have argued that as they deploy fiber access networks, taking copper out of service makes sense for efficiency reasons.

At the same time, CLECs are supporting Cbeyond Communications (Nasdaq: CBEY) in its push to get the FCC to mandate access to fiber optic access lines, something the big incumbents are all fighting. Today, fiber lines are available only via special access tariffs.

The feds may be leaning more toward fiber access relief than protection of copper, based on comments Monday by Sharon Gillett, chief of the FCC's Wireline Competition Bureau. Reminding the audience that the federal agency has a lot of business on its plate, Gillett said protecting the copper network might not be a priority because "generally speaking, copper is backward-looking and fiber is forward-looking."

"There are a lot of very motivated and idealistic people [working at the FCC] -- these are really smart folks and really good folks, but there aren't enough of them and we can't do everything," Gillett said. "We have to decide what are the most important proceedings."

The comment promoted a fast reaction from moderator Joe Gillan, longtime industry consultant with Gillan Associates.

"People that view the world more comprehensively don't see [copper and fiber] as competing things," but as two different access paths, Gillan said. "There is no question that copper can be used to derive acceptable broadband speeds under certain circumstances."

What the FCC is likely to do is to create an analytical framework for looking at what is now called the "special access" market and decide what problem it is trying to solve, then ask the industry for data relevant to that problem, said Paul de Sa, chief of the Office of Strategic Planning and Policy Analysis at the FCC.

What the FCC is likely to hear from any CLECs is that access to copper remains a priority.

Copper protection is of vital importance to small-to-mid-sized business customers who need services that are better than residential DSL or cable modems but not as expensive as metro Ethernet, said Jason Wakefield, vice president of governmental and external affairs for Covad Communications Inc. .

"The [incumbents] are a market failure where small to mid-sized businesses are concerned," he said.

Cbeyond is pushing for fiber access, however, because copper is inadequate today and will be more so in the future, said Bill Weber, chief administrative officer at Cbeyond. His company can only reach 37 percent of its customers with Ethernet over copper today and will only need faster services going forward.

To strengthen its case, Cbeyond is asking for access to incumbent fiber lines at retail rates, not wholesale discounts.

"That guarantees innovation," Weber said. Service providers buying at retail rates would have to innovate in order to upsell customers on a value-added bundle or "they are just buying themselves into a price squeeze," he said.

The wholesale operations of major incumbents are, to some extent, caught in the middle on this debate.

Quintin Lew, senior vice president of marketing for Verizon Enterprise Solutions Global Wholesale, is well aware of the controversy. "We are working with our customers to work through the issue," he said. "We will either offer them access to our copper or a migration plan to fiber."

Lew insists Verizon has not taken copper lines out of service, adding that Verizon understands that a robust wholesale operation "is key to using the network to the fullest, as part of the most efficient network model," and is committed to supporting its wholesale customers going forward.

One thing the CLECs can't afford is a protracted legal and regulatory battle, Weber argued.

"We can't afford another round of costly cases," he said. "We could barely afford it when AT&T and MCI were on our side [before their acquisition by SBC and Verizon, respectively] and we certainly can't afford it now."

— Carol Wilson, Chief Editor, Events, Light Reading

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stanhubbard
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stanhubbard,
User Rank: Light Beer
12/5/2012 | 4:41:15 PM
re: Copper or Fiber? CLECs Want Access to Both
I wish I could have been at the COMPTEL show to hear the comments from the FCC's Sharon Gillet and moderator Joe Gillan, but I have been wrapping up an Ethernet access equipment market report that is related to this subject. The Ethernet over bonded copper pair access market just had its best quarter ever in 4Q09 because operators across the country are taking advantage of the technology to shift customers from T1s to higher speed mid-band Ethernet services. As one key Tier 2 operator told me lately, "the sales guys love it (Ethernet-over-bonded copper pair technology)" because they can turn up an Ethernet service faster than they can a T1 and offer higher speeds for less money.

While there is no question that everyone would like fiber, there's tremendous value remaining to be unlocked from the copper infrastructure. The Ethernet-o-bonded copper pair equipment is relatively inexpensive, and the return on investment is fantastic. It's a no brainer to keep the copper infrastructure in place and let it continue to deliver more bandwidth per pair while industry players build out fiber to more locations.

Pulling copper out of the ground now would be like ripping up all the two lane roads around the country just because everyone favors a four lane road or highway.
cnwedit
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cnwedit,
User Rank: Light Beer
12/5/2012 | 4:41:15 PM
re: Copper or Fiber? CLECs Want Access to Both
Stan,

There are many CLECs here in Nashville who agree with you 100%, and they are taking tha message to the FCC. I'm sure you'll be oft-quoted.

Oh, and Michael Howard from Infonetics says "Hi!" -- Carol
billy_fold
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billy_fold,
User Rank: Light Beer
12/5/2012 | 4:41:11 PM
re: Copper or Fiber? CLECs Want Access to Both


What are some of the cost items that the incumbents incur to maintain the existing copper plant and how much do they cost?


 


 

paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:41:10 PM
re: Copper or Fiber? CLECs Want Access to Both


billy,


 


Think about maintaining a network you are not using.  So, imagine a bundle of unused copper.  Somebody comes in to lease it and it is bad (broken, cut, degraded, etc.).  The ILEC has had to:


1 - Potentially proactively maintain it even if nobody ever wants it.


2 - Keep people on staff to maintain facilities they will never use - as it is only used in the wholesale model.


3 - Repair and replace facilities that they will never use.


These costs go up as cable plants age and repairs become more likely.  It would be better to work on fiber unbundling techniques over the long haul.


 


seven


 

cnwedit
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cnwedit,
User Rank: Light Beer
12/5/2012 | 4:41:09 PM
re: Copper or Fiber? CLECs Want Access to Both
One of the issues here is trying to get a handle on the costs involved. What most CLECs are concerned about is not so much the individual copper drops into the homes served by FiOS or U-Verse but the copper that serves small to mid-sized businesses, who are not signing up for fiber-based service. Granted, some of the copper facilities are shared, and there is an expense to maintaining that copper network. It is easier for Verizon to argue its case against maintaining the copper since it has gone all-fiber in large parts of its network, while AT&T is still using its copper plant to deliver U-verse, albeit from fiber-built neighborhood nodes.
ssfiberoptics
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ssfiberoptics,
User Rank: Light Beer
12/5/2012 | 4:41:09 PM
re: Copper or Fiber? CLECs Want Access to Both
the reason the FCC ruled years ago to "protect" fiber access lines from having to lease them to a CLEC was to encourage the ILECs to make the huge investrment involved in fiber accessVZ alone has made almost $5B so far--if they "had" to lease these lines to a lower cost competitor. plus maintain the old copper lines,the business model wouldnt work,and we'd be sitting here now without FIOS and UVERSE.AS they say , theres no such thing as a free lunch.If the CLECs really wanted the copper lines,they should make an offer to the ILECs to buy the copper network that they think is being "idled"
paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:41:08 PM
re: Copper or Fiber? CLECs Want Access to Both


Question to you Ethernet over Copper folks.


Ever done any work to figure out if your systems will work for 4G applications with the 5msec latency thing?


 


seven


 

paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 4:41:08 PM
re: Copper or Fiber? CLECs Want Access to Both


Billy,


They own it. The whole idea of a CLEC is to rent the facilities that other people own.


seven

billy_fold
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billy_fold,
User Rank: Light Beer
12/5/2012 | 4:41:08 PM
re: Copper or Fiber? CLECs Want Access to Both
Does Verizon actually own the copper or do they have a long term lease on it?
ssfiberoptics
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ssfiberoptics,
User Rank: Light Beer
12/5/2012 | 4:41:08 PM
re: Copper or Fiber? CLECs Want Access to Both
agree---the larger feeder copper cables are mostly residenrial esp in non-urban areas, and only have a small percentage of the pairs linked to businesses, so separating the buisness pairs would be impossible,As far as shared facilities lie MDFs and X-connect boxes,again 90% would be residential, so theres just now way to keep the business copper pairs,while idling the residential lines.Its kind of like being partially pregnant.As to the different approaches of ATT and Vz, my view is that in the long run, the one closest to the home with fiber will win--so Vz approach is much better strategically than Ts.The reason is that once large bandwith becomes mor prevalent, like 100mps to homes, the apps will explode, and T wont be able to catch up--whereas Vz will be ready
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