Sprint doubts own ION plan
Converged voice/data net relies on unlikely RBOC cooperation.
By David Rohde
Network World, 7/13/98
Washington, D.C. - Sprint's super-efficient network capable of converging voice and data traffic over a single broadband pipe won't likely be coming to your doorstep anytime soon.
Statements filed by Sprint Corp. with the Federal Communications
Commission and obtained by Network World reveal Sprint is not confident
about obtaining the local access lines it needs to produce the Integrated
On-Demand Network (ION).
In language that at times directly contradicted statements by executives at the
ION launch last month, Sprint lawyers said they were "gravely concerned"
about the carrier's ability to obtain digital subscriber line (DSL) local loops
needed to reach businesses and homes. ION, announced with much fanfare
in June, is Sprint's new combined local and long-distance architecture (see
story, NW, June 8, page 1). The network is designed to concentrate a user's
voice, data and Internet traffic through an ATM device on the customer
premises.
The traffic is then shipped over a broadband facility leased from a local
carrier to a special Sprint service node. Using service management software
from Bellcore, the node then does everything from delivering a local phone
call across the street to providing wideband Internet access and
videoconferencing.
But because Sprint is not building its own local networks, Leon
Kestenbaum, Sprint's vice president of federal regulatory matters, asked the
FCC to rule that regional Bell operating companies' broadband digital
access lines be subject to the same resale rules that apply to regular analog
lines, meaning that they must be sold to competitors at a discount. For
example, Kestenbaum warned that unless the FCC forces super-RBOC
SBC Communications, Inc. to resell DSL lines at a discount, "Sprint would
be foreclosed from using SBC's [asymmetric] DSL services altogether."
And while Sprint marketing and technology officials last week continued to
insist that they plan to install their own DSL access equipment locally to
reach ION customers if they can't obtain the lines from RBOCs,
Kestenbaum virtually ruled out this option for the ION rollout.
"As a matter of simple economics, the alternative of buying unbundled
copper loops and collocating Sprint's own xDSL equipment in [RBOC]
central offices would be commercially infeasible in all but a handful of
offices," Kestenbaum wrote. The cost of such a technique is high,
construction times are significant and space is constrained in many central
offices, he said.
Sprint's hesitation about the ION rollout bolstered the views of some
analysts who have privately ridiculed ION as a crass publicity grab to
counter aggressive new carriers' hype over IP convergence.
"That was the worst announcement I've ever seen," said one prominent
analyst who asked not to be identified. "They claimed they were the only
ones who could do this kind of thing, and then gave no details or proof."
Ironically, Sprint's popular frame relay service has successfully migrated to a
new class-of-service-based offering announced last year, the analyst added.
But Sprint has failed to define a migration path from frame relay or any other
service to the new ION services that would merge data traffic with voice
and video. Other analysts said Sprint was engaging in the time-honored
practice among carriers of saying one thing on Wall Street and another in
Washington. "The lawyers are saying that if there's no regulatory relief,
there's no ION," said Frank Dzubeck, president of Communications
Network Architects, Inc., a consulting firm in Washington, D.C. "And
they're right. They will fail unless the government gives them relief for the last
mile to the home."
Broadband bonanza
Sprint's filings were made in response to a growing movement in Washington
to deregulate the RBOCs' broadband data operations, even before the
RBOCs gain general authority to enter the long-distance business. All of the
RBOCs except BellSouth Corp. have filed petitions asking the FCC to
allow them to carry IP and other data traffic across their regions without the
usual restrictions on local calling areas and requirements to offer their
facilities to competitors such as Sprint.
The RBOCs' hook: a provision of the Telecommunications Act of 1996 that
went almost unnoticed until this year. Called Section 706, it requires the
FCC, within 30 months of enactment of the act, to promote broadband
networks by dropping burdensome regulations on broadband networks, or
at least have a proposal to do so. That deadline falls next month. Not only
Sprint, but AT&T, MCI Communications Corp. and the Commercial
Internet Exchange Association, an ISP trade group, have opposed the
Section 706 petitions. And the Association for Local Telecommunications
Services, a competitive local exchange carrier (CLEC) trade group, has
asked the FCC not only to deny the petitions but to affirmatively rule that
RBOCs must resell their DSL and other broadband facilities at a discount.
The stakes are higher for Sprint than for its competitors. Unlike AT&T and
MCI, Sprint is neither buying nor merging with a facilities-based CLEC,
meaning it has to lease all of its local facilities except in those smaller markets
where it owns some incumbent phone companies. As a result, Kestenbaum
told the FCC that Sprint must "utilize the RBOCs' broadband capabilities to
bring ION to market on a widespread basis." And that "depends to a
significant degree" on the FCC's Section 706 decisions, he said.
Unfortunately for Sprint, FCC Chairman William Kennard has been
receptive to the RBOCs' Section 706 petitions. "They have rightly asked,
'Why should we make this new investment if we simply have to turn around
and sell this new service, or the capabilities of these advanced electronics, to
our competitors?' " Kennard said in a recent speech.
Getting the story straight For their part, Sprint officials were scrambling late
last week to clarify their ION rollout plans, in advance of Sprint Chairman
William Esrey's keynote address about ION to this week's Internet World
show in Chicago.
Sprint has claimed "key network access agreements" for ION with SBC
subsidiary Southwestern Bell plus BellSouth, Ameritech Corp. and GTE
Corp. Jeff Anderson, Sprint's senior director of strategic development, last
week said those agreements cover Broadband Metropolitan Area Networks
(BMAN), which Sprint defines as fiber rings that run directly into user
premises or are accessible over T-1 tail circuits.
But the BMAN agreements do not include DSL circuits, he said. And
Anderson insisted that Sprint was still planning to install its own local DSL
equipment. "By definition, under the architecture of ION, with the Service
Node and Service Manager, we'd be able to take a dry copper loop and
put the necessary DSL electronics on it."
Yet Sprint's filings also disclosed that the geographic availability of ION will
be subject to advance customer demand. Kestenbaum said one reason why
Sprint is reluctant to install its own central office DSL termination gear -
known as DSL Access Multiplexers, or DSLAMs - is because it can't
guarantee sales of ION services. "A DSLAM that can terminate roughly 500
loops would be grossly underutilized in an end office where Sprint has only
one or two ION customers," Kestenbaum wrote.
John Hoffman, Sprint's senior vice president of external affairs, confirmed
that Sprint will wait for demand to develop in an area before rolling out ION
on a dial-up basis. But he added that Sprint officials hope corporate usage
will spur clusters of telecommuters to take up the offerings. "If they have
hundreds of employees who want the services, we'll move heaven and earth
to serve those customers," Hoffman said.
Nevertheless, Hoffman, who oversees Sprint's regulatory affairs operation,
said prospects for gaining ION dial-up local access at sufficient bandwidth is
clouded in the regions of the four RBOCs with Section 706 petitions, which
if granted would probably wipe out Sprint's ability to resell RBOCs' DSL
lines. "Are we less optimistic with respect to those four [regions]? Sure,"
Hoffman said. Reminded that there are only five RBOCs left and asked if
that therefore means Sprint is concerned about ION access in most of the
country, Hoffman answered "Yes, a good part of it." He added: "[The
RBOCs] are exhibiting anticompetitive tendencies, and that makes us very
uncomfortable."
However, Hoffman said large businesses should look first to the BMAN
fiber circuits that Sprint is leasing from some local carriers, and Sprint is still
considering alternatives to DSL resale, including cable lines, power lines and
wireless loops. And despite the documents that seemed to rule out
collocating Sprint multiplexers in RBOC central offices, Hoffman backed the
statement of Sprint's strategic development director that such a method was
indeed feasible. "Even if some of the Bell companies are absolutely
obstinate, we've still got the ability to buy unbundled loops and condition
them ourselves," Hoffman said.
Esrey originally announced that ION services would go into beta test with
selected commercial customers later this year and would become generally
available to businesses in mid-1999, with residential availability late in 1999.
"But Sprint has a way out," Dzubeck said. "Esrey didn't say how many [ION
circuits] he's going to put in - and where." |
