Verizon Ups Ante for Small ISPs
By Jim Wagner
Local Internet service providers are howling mad at one telephone company's
policy change that threatens to wipe out its attempts to provide competitive
broadband services.
Verizon Communications is planning to tell ISPs that if they wish to continue
offering digital subscriber line service to its customers, they will need to
contract for an OC-3 line, the equivalent to 84 T-1s, in order to do business with
them.
While it's been common knowledge the telco is switching its backbone network
from analog-designed frame relay services to the newer digital asynchronous
transfer mode (ATM) network, the ante to get on the new network has been
kept under wraps.
Frank Tower, chief technology officer at ISP NorthNet in Oshkosh, WI, said
the reasons behind the network change make sense, but the line requirements
are hard to understand.
"I can understand why they (went with the new network topology), because
ATM is a far superior technology," Tower said. "What I find actually onerous
out of that is Verizon saying 'you must buy an OC-3.' That's a gigantic pipe that
almost any small, let alone medium, ISP is not going to be able to afford. Not
even close."
Tower said the normal transition from one network to the other is usually
handled in stages starting with a T-1, then followed by a DS-3 and later OC-3.
An OC-3 line, he said, would handle roughly 2,000 DSL users and is made up of
about 84 T-1s.
Repeated requests for information from Verizon went unanswered.
According to Daryl Schoolar, an ISP strategies analyst at online research
company Cahner's Instat, the move to require such a large amount of
bandwidth is likely the result of the recent failures by DLECs, but he said there
are plenty of other companies with which ISPs can reach wholesale
agreements.
"It could be very well that Verizon is raising the bar to limit the whole approach
(of small ISPs who wholesale Verizon service), and to make sure that those
who do approach them are more comfortable financially," Schoolar said. "(But)
from a small ISP point of view, there are still ton's of different companies they
can get a backbone connection with like the DLECs, they can go to WorldCom,
they can go to Cable & Wireless and they can go to AT&T."
It's uncertain at what point the courts or federal regulators would step in to
provide relief for an industry dependent on the ability of the incumbent local
exchange carriers like Verizon to open its lines in good faith for competitive
services.
It's the Baby Bell's first real policy move in the Bush Administration, and tests
the Federal Communication Commission's resolve to become more hands-off
when it comes to regulating the way information is exchanged on the Internet.
Michael Powell, speaking at his first public appearance as FCC chairman, said
his vision of the FCC lets the marketplace determine the playing field, not
regulation.
"I don't like the knee-jerk assumption that it is simply discriminatory for any
carrier or provider that wants to try to maintain some of the advantages, in
essense, to capture some of the value," Powell said. "The real issue is not
whether they do that, but whether they do so in a manner that actually then has
an anti-competitive affect on consumers."
The Telecommunications Act of 1996, he said, unleashed broadband but
brought in many companies with its "business plan written on a napkin" and
particularly unsuited to succeed in broadband deployment.
He was likely talking about data competitive local exchange carriers like Covad
Communications, NorthPoint Communications and Rhythms NetConnections,
which have run into financial problems with broadband ISPs who couldn't pay
for the lines they ordered. That forced the DLECs to take a loss, while still
paying the telcos for the provisioned lines.
Verizon's new policy is just the latest in a long line of hijinks perpetuated by
regional Bell operating centers (RBOCs), ISP owners maintain, a laundry list
that includes stalled installation times and bungled billing procedures.
Beldar Associates, a Franklin, VA, ISP, has been trying to get DSL service to
its roughly 9,000 residents. Neil McNeely, Beldar's owner, said his company
has been waiting in vain to deploy broadband services in his community, but
Verizon problems have put that on indefinite hold.
"Our first orders in mid-November have still not been filled because there are
not enough DSLAM (DSL Access Multiplexer) cards in the central office,"
McNeely said. "We got 12-14 customers signed up but we can't bill them yet.
However, we are paying for a $530.00 per month circuit we can 't make any
money off of.
"Next, our first bill, instead of the $530.00 plus initial $395.00 fee, turns out they
bill us for over $2,900.00," McNeely continued. "Then the next (month's) bill is
$720.00 plus the overdue $2,900.00, which they promised in writing to have
resolved.
Line pricing considerations aside, a switch from frame relay to ATM requires
new circuitry, a cost many companies will have to accept if they want to
continue with the contracts they signed with Verizon.
"They suckered us in to wholesale their service and now they only want the big
ISPs to work with," McNeely said. |
