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Wholesale/transport services

Fed Reg Debate Heats Up

As the Federal Communications Commission (FCC)'s review of regulations in the telecommunications industry approaches completion, the cheerleaders on either side are working themselves into a lather.

Wednesday, the Telecommunications Industry Association (TIA) decided to dive into the debate headfirst. Backing up the incumbents' line of defense, the organization sent a letter to FCC Chairman Michael Powell outlining the findings of a study it has done on the link between cuts in carriers' capital spending and a decline in quality of service (see TIA: Capex Cuts Cripple Quality).

"[T]he recent and projected broad downward trends in capex should cause alarm bells to go off among regulators at every level,” TIA president Matthew J. Flanigan writes in the letter. “Concrete action must be taken quickly to restore the balance between regulation in service of the public interest and the creation and maintenance of a regulatory environment that will promote investment and shareholder value.”

The Bells have been arguing for months that the FCC should dismantle the 1996 Telecommunications Act regulations that oblige them to let their competitors lease access lines and network elements at set wholesale prices. They insist that the regulations are causing them to lose money and dissuading them from investing in their networks (see Whitacre: Regulations Will Wither, and SBC's Fed Up, But So Are Its Critics).

While TIA is pushing hard for the FCC to remove regulations on broadband, it claims not to have a position on whether or not the agency should dismantle the entire unbundled network elements platform (UNE-P). “We haven’t gotten involved in that particular exercise,” says David Owen, the chairman of TIA’s public policy committee. However, the organization’s report, which shows how Ameritech’s customer complaints exploded as the company cut capital spending in the 90s, is bound to be used by the RBOCs to support the argument for a complete end to regulations.

The report cautions that the huge reduction we’re seeing now in incumbent capital spending will have dire consequences. “Nothing good has come out of the ILECs feeling inhibited to make investments in their networks,” Owen says.

Other organizations have been voicing their support for getting rid of, or at least scaling back, regulations. Dan Phython, senior vice president of law and policy at the United States Telecom Association, speaking on a panel at the UBS Warburg telecom conference in New York yesterday, said: “If the Commission does the right thing, there will be more spending on the side of the incumbent carriers.”

At the other end of this debate, the competitive carriers and their supporters have been equally vocal in their resistance to dissolving regulations, insisting that would mean an end to competition altogether (see AT&T's Dorman Disses RBOCs, and Report: DSL Is Profitable). The Bells aren’t losing money and cutting capital spending because regulations treat them unfairly, they argue, but because they don’t know how to compete.

"The Bells need to learn to be wholesale carriers... They’ll make a lot more money if they do,” said Robert McDowell, the vice president and assistant general counsel of the Competitive Telecommunications Association (CompTel), speaking on the UBS Warburg panel yesterday. “UNE-P is here to stay... Two to three years from now, it won’t look a lot different than it does today… You can’t just pull the plug on UNE-P.”

While the FCC itself insists that no decisions have been made, industry observers believe a compromise is in the works. “There will be constraints put on UNE-P,” UBS Warburg analyst John Hodulik said after the discussion. “There’ll be something more favorable for the Bells. The question is how favorable.”

“There will be no winner,” opined Robert C. Atkinson, the director of policy research and special projects at the Columbia Business School. No matter what the FCC’s decision turns out to be, he insisted, individual states will continue to play a major role. “The FCC just couldn’t come up with an optimal decision that works equally as well in Manhattan and in Kansas."

The FCC has said that it will try to reach its decision on whether or not to dismantle the regulations by year-end, but that the process could stretch into the new year.

— Eugénie Larson, Reporter, Light Reading
www.lightreading.com
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lastmile 12/4/2012 | 9:18:39 PM
re: Fed Reg Debate Heats Up Slowly but Surely the fraudband era will come to an end.
The Fed Reg concerns copper and any kind of decision will make no sense to the average consumer.
If the Fed decides to continue with the Telecom Act of 1996 then the fraudband era will continue for a limited time. If the Fed decides to de-regulate, then the Fraudband era will continue for a limited time. The fact remains that whatever the Fed decides the fraudband era has a limited life.
The average consumer knows Cable/DSL and has never had a taste of a true broadband connection because no such facility is available to the public. True broadband is feasible with a fiber node and a long range Wi Fi. Nothing is impossible and I am convinced that this will happen Slowly but Surely.
JMHO
rjmcmahon 12/4/2012 | 9:19:10 PM
re: Fed Reg Debate Heats Up Yeah, and shame on the company that passes more homes than any other - Comcast. When will it unbundle its network!
_____________________

The lesson here may be that two adversaries can find a common belief, though I don't see the RBOCs ever promoting and fighting for cable unbundling and open access.
rjmcmahon 12/4/2012 | 9:19:10 PM
re: Fed Reg Debate Heats Up How can you claim that the availability of cable-based services does not create competition? You have two facilities coming into the home that can provide similar service. Hence no monopoly. What justifies forcing competition on one wire coming into the house when there is a choice of another wire?
_________________________

Competition occurs when several suppliers offer the same services or goods. The facilities, and in this case the wires, has little to do with that. For example, a painter and a plumber both use the same type of facility, a truck, to reach a home. These does not mean they compete.

Cable and phone companies do not want to compete. They want to preserve their monopolies over voice and broadcast video. The feign competition so they can expand their monopoly and fool the government.

Your last question is a good one and worthy of honest debate. What justifies forcing common carrier over our public rights of ways? I'll suggest we erred by not requiring common carrier rules on cable monopolies. The phone companies now argue that two wrongs will somehow make a right. The wisdom on the bathroom wall says, "Two wrongs can never make right, but three rights can make a left."
grapsfan 12/4/2012 | 9:19:52 PM
re: Fed Reg Debate Heats Up lastmile wrote:

> I discussed about fraudband and some people insulted me.

If you mean me, I'm sorry. Didn't mean to directly insult anyone by asking questions. "Goofball" was probably a little out of line, but it's important to understand that this isn't a "well, just increase the size pipe to everyone's house, charge them $10 more, and everything will be great!" scenario.


> My aim was to discuss the reality of today's internet and to insist upon the fact that the average consumer would be willing to pay a few bucks extra for a broadband connection.


That is probably a true statement. But the bigger issue is that providing that on a wide-scale basis, to really get a 1.5 Mb/s or higher connection at everyone's house requires an increase in the access and core networks that nobody is going to pay for today. It's many billions of CapEx. What we get today, as you rightly say, is a promise of DSL that typically only provides 300-400 Kb/s of download speeds, much worse on regular old Web or E-mail.
dietaryfiber 12/4/2012 | 9:19:56 PM
re: Fed Reg Debate Heats Up Again, rj what the heck are you talking about....

Internet - Formed 1972
Ethernet - 1977 (no reason its here just for fun)
IBM PC - 1982
WWW - 1994
Internet Explosion -1996

I hate to point out to you that the PC and the Internet existed over a decade before the explosion which was WWW based.

Yeah, and shame on the company that passes more homes than any other - Comcast. When will it unbundle its network!

You guys are funny.

The RBOCs inherited the local connections from AT&T. Which as I recall, was a public company the whole time and got cost plus rate of returns. We could go back to cost plus. However, that will limit network innovation even further than it is now.

dietary fiber
Half-Inch Stud 12/4/2012 | 9:19:56 PM
re: Fed Reg Debate Heats Up yep, my CABLE-line goes to < 56Kbit/s in the evenings. 1.5Mbit/s in the mornings.

DSL was about 2x to 3x the dialup rate and constant across 24hours...aside from blackout times.

Dialup was boring.

Nope, I don't like the "products" enough to want paying for them to arrive at a faster rate.

Dare to state: the Internet is a Library, not an Arcade.

Half-Inch Stud
AisA 12/4/2012 | 9:20:01 PM
re: Fed Reg Debate Heats Up
rjmcmahon says:
"There will be no facilities based competition. This is pure deception by those attempting to monopolize our public rights of ways. Again, it's like Henry Ford claiming a small portable generator competes with Samuel Insull's electrical transmission lines. Or that a truck can compete with Kinder Morgan's pipelines."

----

How can you claim that the availability of cable-based services does not create competition? You have two facilities coming into the home that can provide similar service. Hence no monopoly. What justifies forcing competition on one wire coming into the house when there is a choice of another wire?
whyiswhy 12/4/2012 | 9:20:02 PM
re: Fed Reg Debate Heats Up Good God, I was hoping NOT to relive the Mac versus PC thing on this board! Wintel won...OK? :-)

My point was and is: Apple went around the (existing) networking problem with AppleTalk, which was a cheap local network. Many folks just used the outer two pairs of telephone wires to make networks all over campus/work, using existing wiring. It saved a lot of money and time.

That was in the face of a lot of existing coax networking for the DEC VAX's in our labs, and the IBM terminals in our offices. PCs/MACs were frozen out for the longest time by those same companies and our own IT groups trying to maintain their claim to computing/networking.

The network was private/corporate, and the Internet was a passing fancy for the geeks in the research labs; no reason to get bothered. Bandwidth was crap anyway.

Word >>>> Internet BW still is crap.

The similarities to the current situation should be obvious. That's why the Wintel group is going 802.11: they are going to use the same tactics (once used against them) against Ma Bell / Pa cable.

-Why
lastmile 12/4/2012 | 9:20:02 PM
re: Fed Reg Debate Heats Up I discussed about fraudband and some people insulted me.
My aim was to discuss the reality of today's internet and to insist upon the fact that the average consumer would be willing to pay a few bucks extra for a broadband connection.
Some continue to insist that broadband is available and that few are interested in broadband. But I continue to insist that today's broadband is actually fraudband because a cable/DSL connection is as good as a dial-up.
I also wrote about new a technology that would help the last mile problem at speeds far in excess of today's fraudband. I talked about Vivato and a similar technology. The NYT of today has some interesting news.
JMHO
rjmcmahon 12/4/2012 | 9:20:03 PM
re: Fed Reg Debate Heats Up Certainly not to turn it over to them lock stock and barrel as you propose! That crap about public right of way is just the government saying they get a cut of the action.

The best thing is to just work around the blockage (the government) and avoid economic constipation.
___________________

In the case of real broadband there is no avoiding using right of ways. This means some form of government has to be involved. (802.11x for the last mile is no solution.)

The proposal is to give ownership of our communications network to the consumers and the producers, as we have done with our roads. Maximize connectivity, support consumer choice, and allow anyone to produce and publish while constantly fighting to eliminate the gatekeepers. That is a free market.
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