Copper or Fiber? CLECs Want Access to Both
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