Frank, Why limit wireline access competitors (CLECs) as long as there is no inherent limitation like spectrum?
<Perhaps there should be four franchising privileges in every locale for the ILEC, the CableCo, the utility company, and a fourth one for all others.
To gain entry into this last one, all others, maybe there should be a countdown starting right now and running through the end of March '99, for aspiring CLECs to announce their candidacies. From then on it could be grandfatherdom, or licenses for sale. Kinda like a New York City Taxi Medallion owner.>
Isn't a taxi medallion, or an IBM reseller medallion of old, about as anti-competitive as it gets? Aren't these designed quite specifically to protect incumbants from the downward price pressure that comes from unrestrained new competitive entrants? Where is the public good there?
<Hey, it's not that far fetched. We could see the wireline industry face the same kinds of lotteries and license allocation measures as the Cellulars, PCSs, xMDSs, and the other WLLs. And if it's good enough for NY City Taxi Medallion owners, then...>
I think you are mixing baseline situations and reaching a highly suspect conclusion (I'm assuming here that your tongue is not pushed hard into the side of your face.) Your examples are all based on limited allocation of spectrum -- the FCC needed some way to fit 'x' prospective service providers each needing 'y' MHz of spectrum into 'n' MHz of spectrum available. We might argue that the results from comparative hearings, lotteries, and some auctions are so ugly that we certainly don't want to go there unless there is no choice whatever. There certainly seem to be choices with wireline.
<One of the things that strikes me directly about this whole issue is the notion that ILECs would be very slow to develop and implement any form of "excellent" last mile solution that they cannot control, or utilize, entirely and exclusively.
And lets not kid ourselves, ILECs are capable of deploying excellent systems. Their end office POTS administration and their outside plant functions are without match in any comparable industry.
They might implement a framework, on the other hand, that was just mediocre from a feature standpoint, if they knew that they would have to unbundle it, relegating them in effect, to the status of wholesaler.
Heck, if I knew that I would only be eligible to a predetermined % in a wholesale retail arrangement, on the basis of regulated resale, then I'd want that as soon as possible, if the margin was appreciable, or I wouldn't want it at all if it meant that I'd be eliminating
my options or cutting myself at the knees. I would not waste my time putting in something that would eventually cannibalize the rest of my offerings at the same time, if I couldn't see the lion's share of its proceeds.>
This is a cogent argument (perhaps unintentional) against some interesting ideas that have been put forward by Diamond Lane proposing what they term "Logical Collocation" -- what has been termed elsewhere in discussions "virtual collocation." Under that scheme, the ILEC would sell and deliver a UNE or a combination of "glued" UNEs that incorporate ILEC subloops, ILEC DSLAMs, ILEC ATU-R and ATU-C, and ILEC fiber backhaul facilities from the remote DSLAM to a CO hand-off point, say, the MDF. Those ideas have a lot of merit for sidestepping the snarl of collocation complexity in field locations, but they create some new requirements for new shared access DSL management systems that all participating CLECs can access, with the ILEC presumably managing the (OSS)system. Such a system does not presently exist, but it would not seem like a man-to-the-moon level development effort. The bigger criticism of such a plan has to be that it could discourage innovation and delivery of new services via new DSL technology that is not part of the ILECs "approved list" of compatible and supported vendors/models. This problem hurts everyone: the customers could be denied the benefits of innovation; the CLECs could be denied opportunities for differentiation in the market; and the ILECs descend into a purgatory where everyone is mad at them even though they are working very hard in good faith to deliver what they promised, probably successfully at some point. The requirements would certainly be constantly in flux, with new technological capablities needing to be added to the "supported" list faster that the ILECs can assure themselves the new items work as promised, and don't interfere with the rest of the installed "approved" hardware and software.
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<Perhaps the ILECs' collaboration with the Intels, Compaqs and the Microsofts of the world would lead to an "excellent" network access solution, the very same kind that the critics have been suggesting that they should have had in place by now.>
The g.lite standards and products that come to market in late 1999/ early 2000 have a definate consumer orientation. The g.lite products will support a "best efforts" service for high speed internet access at the lowest possible delivered cost. It will not (at least initially, and probably for a long time) support the features that many businesses are looking for: managed data services, QOS guarantees, high guaranteed upstream data rates, etc. So this is really not a solution for the market space where virtually all the CLEC DSL activity is now -- in small and medium business. These customers are mostly buying 384kb/s symmetric SDSL services from their DLECs, and it is hard to see where any announced collaborations really address this market space.
<Now that they have proposed just such an initiative to fit that bill, they are again facing resistance from their competitors and the regulators, because the fairness rules dictate that others should have the ability to ride their coattails, while not sharing in up front
expenses or the down the road risks of putting the infrastructure in place.
Do you see the contradictions inherent to this situation? Or is my bell-shaped helmet starting to show here, again?
On the contrary. I am not that naive. It wouldn't surprise me to learn that there was a foregone conclusion on the parts of the ILECs that such resistance would be imminent, and that they were banking on this all along. And that they used this opportunity as a red
herring to demonstrate that they could at least give it the old college try, against all odds, and all that.>
I won't try to explain thought processes at even one ILEC, but I would suggest that it has to be a mistake to try to characterize thinking at multiple ILECs monolithically. Even when a few ILECs sign on to a specific position in a market foray or regulatory position, chances are that they are just close enough in their thinking to make the alliance of convenience workable. Clearly, US WEST is an outlier in the DSL game, but Ameritech has an interesting attitude of resignation toward DLECs (especially Northpoint), and BLS and BEL seem from my perspective to be trying to make DSL services roll outs work. The perhaps fair criticism of BLS and BEL is that they might be trying to do too much for DLECs in the loop qualification arena, when the DLEC just wants a loop and he will see if he can make it work. Those issues are actively discussed in interconnection agreement negotiations and I think that is a reasonable place to get mutually satisfactory resolution of the technical parameters and loop availability issues.
You followed with a great anecdote that no one who has been near where you worked would doubt for a moment. Maybe we are lucky that the DSL provisioning process is handled out of exchange services, rather than special services, at least in BEL. Those special services guys, well, you captured it well.
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