It appears that, at least with regards to the local voice market, the ILECs are beginning to bleed a little:
telephonyonline.com
In the last few weeks, SBC Communications has blamed UNE-P prices more loudly than usual for the more than 3 million access lines it has lost this year — and for the 11,000 job cuts the carrier announced earlier this month. At the Lehman Brothers' annual CEO Summit last week, SBC Chairman and CEO Ed Whitacre said the company's third-quarter earnings would be at the low end of expectations, partly because it has lost so many lines to UNE-P.
According to SBC estimates, 750,000 lines will be lost to competitors using UNE-P in the third quarter of 2002, more than double the number lost in 3Q 2001. Moreover, the loss rate has steadily increased throughout 2002 from 350,000 lines in the first quarter to 692,000 lines in the second quarter.
That rate will accelerate further as SBC gains approval to provide in-region long-distance service, said Lori Lee, SBC's managing director of investor services.
businessweek.com
Since November, New Jersey state regulators have slashed wholesale phone rates -- what the Bells charge the local providers -- by 43%, to $12.82 per line. This, despite howls of protest from Verizon, which holds a virtual monopoly on local-phone service. And in Texas, home to San Antonio-based SBC, Lone Star State regulators are expected to follow suit with dramatic rate cuts early next year.
"Our attitude is let the chips fall where they may," says Texas Public Utilities Chairman Rebecca Klein. Nationwide, wholesale rates have fallen an average of 7.8% over the last six months, from $18.95 to $17.48, according to data compiled by the state regulators.
Such policies are causing a mounting crisis for the Bells. SBC has lost nearly 3 million retail access lines year-to-date through August, and year-over-year revenue plummeted more than $1 billion in the first half of 2002. SBC says it could lose an additional $2.3 billion in anticipated revenues over the next year.
But if you're an investor in a reactionary, archaic monopoly in possession of a dilapidated plant that has more cobwebs running through it than a 14th-century Gothic church, all hope isn't lost. Your lackey...er...FCC Chairman is still looking out for you:
What the states give, however, the feds could still take away. The Bells have a heavy hitter in their corner -- Federal Communications Commission Chairman Michael Powell, who's openly sympathetic to their plight. Since he took office in January, 2001, Powell has made clear that he would prefer to see a corporate death match among phone, cable, and satellite giants, rather than allow small competitors to chip away at established corporations' profits. |
