[Stall tactics]
Hi BellBoy,
Don't get depressed working for those foot-dragging road hogs. :-) Ya just get bad press. Their image will certainly improve once they start trying to outfox each other instead of the customer.
I'm sure you're compensated well for your hazardous duty. Reminds me of when I worked for a prison. I worked amidst waste & corruption too. Seriously, things could be worse--You could be working for SBC.
Luv ya,
sg
A telecom case study: SBC illustrates how RBOCs are thwarting competition.
By Marc Ferranti
Network World, 12/8/97
On May 6, 1996, a fiber-optic terminal belonging to MFS Communications Co., Inc. but located in a Pacific Bell facility suffered a three-hour outage. The cause? It was installed on an otherwise empty floor Pacific Bell employees had been using during their breaks, often leaving the windows open. Birds flew in and nested in the equipment. Their excrement seeped in and corroded the terminal's casing, ultimately causing the failure.
''It wasn't an intentional act of destruction certainly, but the Bell employees wouldn't have treated their own equipment like that,'' says Eric Artman, assistant vice president of regulatory affairs for WorldCom, Inc., who worked for MFS when it was acquired by WorldCom late last year.
This example, while obviously extreme, points to the negligence and even incompetence that competive local exchange carriers (CLEC) face when trying to make incumbent local exchange carriers (ILEC) live up to the spirit of the Telecommunications Act of 1996 (see story). But in many ways, it's not as bad as the seemingly endless legal wrangling that has made it impractical, if not impossible, for some competitors to enter certain regional Bell operating company territories.
It's like a high-stakes game of chicken. The RBOCs can't get into the $80 billion long-distance market until their local markets are sufficiently competitive. But they are loathe to make it too easy for competitors to muscle in on their monopolies.
''The [RBOC] game is to do as little as possible to get the standard for getting into long distance as low as possible,'' says Anne Bingaman, the former U.S. attorney who presided over the 1993 Microsoft Corp. antitrust case. She is now senior vice president of LCI International Telecom, Inc., a CLEC in McLean, Va.
The problem points to the need for the Federal Communications Commission to work more closely with local regulatory bodies to streamline the negotiation process for RBOCs and CLECs, as Network World's three-part ''Examining the FCC'' series last month showed. Stronger oversight and sanctions would be in order for those ILECs that don't live up to the rulings intended to foster competition.
A good place to start would be with SBC Communications, Inc.
SBC, more than any other RBOC, uses a phalanx of lawyers and millions of dollars in lobbying efforts in a deliberate effort to thwart meaningful competition in its markets, according to a cross section of start-up CLECs, established long-distance giants, industry analysts and regulators. The litany of CLEC accusations against SBC also includes refusal to honor signed interconnection agreements, pulling circuits off the market to prevent Internet service providers from testing high-speed data lines, and threatening legal action to frighten users from doing business with competitors (see story). CLECs have at least some of these problems with all RBOCs, but it is SBC that angers them most.
''SBC is an order of magnitude harder to get an interconnection agreement with than any other Bell,'' says Martin McDermott, senior vice president of marketing for American Communications Services, Inc., a CLEC in Annapolis Junction, Md. ''Their attitude is 'Let them eat cake. We're not going to do anything we don't have to do.' ''
Consider that in April this year, the California Public Utilities Commission (PUC) gave Pacific Bell an interim go-ahead to offer tariffs for services through which competitors could interconnect with its network. In August, before the PUC could give final approval to the tariffs and services, including terms for the physical colocation of competitors' switches in its facilities, the company withdrew its filing.
Why the about-face?
''After Pacific Bell was acquired by SBC, all of a sudden it got harder to do physical colocation. They said they didn't have enough space,'' WorldCom's Artman says. When WorldCom suggested a tour of switching facilities to check out potential spaces, he says Pacific Bell declined.
The legal hurdles SBC puts in front of would-be competitors are perhaps the most daunting, CLECs say.
SBC in July issued what is perhaps the main federal legal challenge to the telecom act. The suit charges that provisions of the act outlining criteria the RBOCs must meet before they will be allowed to offer long-distance service constitute a ''special burden'' that is unconstitutional. The suit is still pending in U.S. District Court for the Northern District of Texas.
SBC also joined other RBOCs in two major lawsuits in the 8th U.S. Circuit Court of Appeals in St. Louis, successfully challenging the FCC's authority to set pricing for interconnection agreements between RBOCs and CLECs.
But turf battles between CLECs and SBC are fought mainly at the state level. CLECs need to get certified to offer services by public utilities regulators, and sign interconnection and resale agreements with RBOCs on a state-by-state basis.
The $25 billion SBC offers local phone service in seven states, from the Mississippi to the Pacific, through its Southwestern Bell Corp., Nevada Bell and Pacific Bell units. For CLECs, simply getting agreements with SBC that let them do business in this area is a tortuous process, especially in Texas, the home state of Southwestern Bell, the company that has grown into the current SBC.
Texas PUC sets final rates for telephone competition
From the PUC, 12/2/97.
Last year in Texas, for example, after SBC-CLEC negotiations for interconnection agreements broke down, the state PUC arbitrated interconnection agreements. SBC signed these arbitrated agreements - typically taken as a sign that a party agrees to the terms. But SBC ignored PUC orders to file related tariffs, then appealed the agreement altogether, according to lawyers still arguing the cases.
Because of such maneuvering, in Texas alone, CLECs are spending hundreds of thousands of dollars each, at the most conservative estimates, to finalize SBC interconnection agreements.
SBC has filed at least nine lawsuits in Texas, not counting identical suits filed in different courts that were later consolidated. SBC dropped seven of these cases recently after an FCC order preempted local law, but one of the two remaining suits is a case that consolidates, in two different courts, SBC's challenge to signed, arbitrated interconnection agreements with five separate CLECs.
Despite repeated requests over a nearly two-month period, SBC would not say how many cases it has filed in state courts in all the states in which it operates.
But the obstacles SBC creates are not just legal, the CLECs say. One reason interconnection agreements had to be arbitrated in the first place was because of the tariffs SBC wanted to charge for unbundled network elements, physical colocation setups and lines for resale.
''Fifty thousand dollars is high but in line for physical colocation, but SBC wanted half a million dollars for a 10-by-10-foot space,'' says Manning Lee, chief counsel for Teleport Communications Group (TCG), a competitive carrier in Staten Island, N.Y. By comparison, NYNEX Corp., now merged with Bell Atlantic Corp., was charging $50,000, and Rochester Telephone Co. in upstate New York was charging $10,000.
That SBC even attempted to charge 10 times more than NYNEX, which serves areas with some of the highest rents in the country, is simply absurd, some CLECs charge. Meanwhile, the arbitration-and-appeal process has sapped start-up competitors' coffers, which are much smaller than SBC's.
''None of the Bell companies are easy partners to work with, but SBC is in a class by itself - and it's not because it has class,'' Lee says.
SBC counters that it was just covering itself. ''Our concern with filing tariffs for colocation was that there were too many options and variations in Texas for us to come up with an average price that would fit all competitors,'' said Selim Bingol, an SBC spokesman at the company's San Antonio, Texas, headquarters. ''The bottom line is we are narrowing down the uncertainties now through the arbitration process and will soon end up with tariff-posted rates for colocation.''
DSL downer
ISPs have been having their troubles with SBC, as well.
IoNET, Inc. offers Internet services in Oklahoma, an SBC state, and was interested in offering access via digital subcriber line (DSL) links. But SBC refused to let IoNET test SBC- provided burglar alarm and local-area data service (LADS) circuits, which can support DSL, says Leonard Conn, president of IoNET.
''SBC is not prepared to deliver DSL access to the Internet, so they're making sure no one else can either,'' Conn says.
When Conn turned to Oklahoma CLECs to get the circuits, he ran into other problems. Interconnection contracts in general always defined a local loop as copper wire with direct-current continuity, which is required for DSL. But one CLEC, which Conn would not name, said SBC changed the language in one contract at the last moment, without notification, to allow SBC to instead provide lines with subscriber line concentrators (SLIC). SLICs limit line use to voice, preventing use of DSL.
SBC counters that alarm and LADS circuits were never intended to carry high-speed data. Rick King, corporate manager for product development for Southwestern Bell, says SBC is carrying out tests to assess the best way to deliver DSL over its network.
Conn concedes SBC is correct when it says LADS and alarm circuits were not originally intended to support DSL and that tariffs for those circuits do not apply to DSL.
''But SBC is being much more agressive than other RBOCs about yanking the circuits off the market, even for testing purposes, and refusing to come up with tariffs for those circuits that would apply to DSL,'' he says.
He adds that he can't get SBC to let him use the circuits to test other kinds of high-speed data services.
Picking up the bill
Another charge leveled at SBC, along with other RBOCs, is that it has refused to pay CLECs for calls SBC customers make that terminate at Internet providers that are CLEC customers. Under terms of SBC interconnection agreements, SBC pays a termination charge to a CLEC when an SBC customer calls a CLEC customer and vice versa. This arrangement is called reciprocal compensation.
During negotiations for interconnection agreements, CLECs had argued for a ''bill-in-keep'' arrangement in which carriers don't have to pay each other for calls terminating into one another's customers.
Ultimately, SBC and the reciprocal compensation arrangement prevailed. But now SBC has unilaterally decided not to apply this principal to calls made to ISPs, saving it millions of dollars in charges it would otherwise have to pay to CLECs throughout its 22-state territory. SBC's stance, according to Bingol, is that calls to ISPs should be considered interexchange calls, which are not subject to the reciprocal compensation agreement. But if this were true, the ISPs and CLECs say, why wasn't SBC more up front about it in contract negotiations? It's just as likely that SBC misjudged the volume of calls that would go out to ISPs and was late in understanding how alarm and LADs circuits could carry high-speed data, according to Conn and other CLEC officials.
OSS SOS
California PUC ruling on PacBel OSS issues
In Word format.
SBC also faces charges - especially from AT&T and MCI Communications Corp. - that its operations support systems (OSS) can't scale up to handle real competition from CLECs. RBOC OSSes track the services each customer has and the types of services for which different lines are provisioned. CLECs need interfaces into RBOC OSSes to order lines for resale in a timely manner, for example.
''We can't get their OSS to work with ours, and we've had a hell of a time getting them to test it with us,'' says Chip Casteel, regional executive, public policy, for MCI.
SBC officials dismiss the charges as coming from companies with a vested interest in keeping the RBOCs out of long distance by arguing that there isn't enough competition in the local loop. The long-distance companies are interested only in offering big-ticket services to businesses, SBC says, but they complain to regulators that SBC foot-dragging blocks them from the residential market. In reality, SBC says they have no interest in the less lucrative residential market.
SBC has fulfilled more than 300,000 customer service orders for CLECs in Texas alone, and its OSS is processing about 10,000 orders per month for CLECs reselling SBC lines, Bingol says.
''We're handling customer service requests [from CLECs] and have no backlog,'' he says. ''It's easy for AT&T or MCI to say they would come in and switch over 20,000 customers a day [from SBC] if they were allowed to, but where are they?''
But cries of foul also are being issued by smaller CLECs, without AT&T's huge stake in long distance and thus with nothing to fear should SBC get into long distance. Likewise, the OSS complaints are coming from carriers that are following a facilities-based strategy, such as TCG, and have millions of dollars invested in switches.
Focal Communications Corp., a facilities-based start-up in Chicago, is trying to avoid OSS problems by focusing on customers who want new lines. It also is targeting services in Ameritech Corp. territory in Chicago and Bell Atlantic territory in New York. These RBOCs are easier to get interconnection agreements with than US WEST, Inc., SBC or GTE Corp., though their OSSes still need work, says John Barnacle, chief operating officer at Focal.
''We've traded operational difficulties for a much smaller market,'' Barnacle says. ''We're avoiding Dallas, for example . . . so if RBOCs are making it tough and scaring competitors away, in some respects, they've won.''
Lots of lobbying
When it comes to lobbying efforts, SBC certainly plays tough.
SBC effectively campaigned for the Texas Public Utility Regulatory Act of 1995 (PURA 95) by tapping more than 80 registered lobbyists and spending millions of dollars promoting the laws, according to Luis Wilmot, a spokesman for the Partnership for a Competitive Texas, a group of long-distance carriers, consumers and businesses. At the time, Wilmot was public counsel at the Texas Office of Public Utility Council, a state consumer advocacy group.
Perhaps the most controversial PURA 95 stricture was the rule that carriers had to build infrastructure for miles around the area they wanted to service, which would make it much tougher for CLECs to set up shop in any given area.
''Half the gallery in the state Senate was Southwestern Bell people on the day the law passed,'' recalls Cindy Schonhaut, senior vice president for government affairs at ICG Telecom Group, Inc. ''Once it passed, they were all high-fiving each other.''
SBC subsequently filed at least two lawsuits related to state PUC decisions that awarded CLECs certificates to offer local services without having to conform to the build-out requirements.
SBC also filed at least seven suits related to PUC decisions that it claimed violated various other provisions of the state laws it had lobbied so hard to see passed.
But in late September, the FCC issued a ruling saying that federal law takes precedence over PURA 95 strictures, including the infrastructure build-out requirement. Several weeks later, SBC dropped the lawsuits that hung mainly on the build-out issue, as well as five out of the remaining seven other suits.
SBC says it dropped the build-out suits to remove an excuse for competitors to say that Texas is not an open market.
''The MCIs, the AT&Ts have no excuse now for not coming in. Let 'em come,'' says SBC's Bingol, who added that SBC will probably apply for long-distance entry in Texas by year-end.
In the eyes of the CLECs, SBC in June came dangerously close to getting approval to enter long distance in Oklahoma. It cleared the first hurdle when the Oklahoma Corporation Commission, the state PUC, voted 4-1 for SBC.
''Most of the commissioners thought they were close enough to the situation to monitor how competition was progressing, but the staff was mainly against it. They thought it was premature,'' says an Oklahoma public utilities official who asked not to be named.
Despite inroads Brooks Fiber Properties, Inc. was making into the business market in Oklahoma, ''no competitors were really coming out and serving customers in a big way,'' the official says.
The FCC agreed and denied SBC's application. It said no competitor was offering general business and residential services - Brooks' tests to four employees' homes didn't count. Despite all the foot-dragging and legal maneuvering, some industry observers are still hopeful competition will come - eventually.
''We're going through a transition period now, trying to get all the kids on the block to play with one another, so there's jostling among the carriers,'' says Jeffrey Kagan, of Kagan Telecom Associates in Marietta, Ga. ''It's going to take some years for the dust to settle, but that's inevitable.''
Similarly, unfortunate incidents are likely to happen in a market in the middle of such a profound transition, says Paul Cohen, a Pacific Bell spokesman, referring to the bird-related fiber terminal failure.
WorldCom's Artman says Pacific Bell ultimately handled that incident in a responsible manner, paying some $40,000 for repairs. Let's hope SBC learns a thing or two from its newly acquired partner. |
