You say:
>>As always, interested in your... view. <<
Not much left for me to say, Bill, after that treatment you gave here... but I'll try. <smile>
>>My point is that ILECs are incapable of delivering these services and will in fact try to block competitors from delivering these services on their local loops. Their motivation is to perpetuate the current business case as long as possible, as shown in the BellSouth example.<<
They'll be able continue their game of blocking and interference, until one of two things (or both) happen:
(1) when the applications that users have on their desktops begin to fully make use of the data carrying capabilities of their existing lines, be they analog 56k pipes (POTS) and ISDN Lines, or even V.34+'s to the point where voice and other m-m apps can be directed to alternative web service nodes. This is the application mobility factor, or the freedom to hop from service node provider to service node provider, we spoke about earlier, without ever leaving the loop you started on. This service node mobility factor makes the desktop application as competitive a force directed against the ILECs, as any CLEC could hope to be. In other words, the ILECs themselves would like to bundle those LD and enhanced services themselves, instead. Are they preparing for this now? I don't think so. At least not in a manner that is deployable within the foreseeable future, to make a difference;
and/or, (2) when alternative access providers begin to make a noticeable dent, to the point when the ILEC must make a decision to react in kind (which, like too many other things, they will do too late, I'm afraid), with similar services or better, or face certain detrimental effects.
>>as with all legal matters, there is always a gray area which can be exploited by attorneys smart enough to delay things long enough to accomplish a goal (witness the White House). So, as controllers of the local loop, the ILECs now seek to delay conversion of the customer connections long enough to build a business which would serve as a revenue replacement.<<
There may be other factors at play, and those have to do with today's informed consumer, and the need to give it away sometimes in order to receive, and the amount of good will that the ILECs may be forced to forego if they don't start treating their subscribers with some respect. Pent up resentment can come back to bite them in the ass, if they don't begin to show some sensitivities to the new found intelligence of many users and what users are demanding.
I know, that sounds naive, but a loyal following presumes that that following is treated with some kind of respect and dignity, and if such respect is lacking on the part of the provider, users will bolt the first opportunities they get. We've sees this all too often with Cable TV and cellular services, and how new entrants, even unproven ones, stand a great chance to sweep up a good part of the target market on the merits of sour grapes alone. I think that the next great series of discussions we should have should center on bundling, and the truths and myths that lie therein. Anyone want to start that one off?
>>Don't underestimate how significant the revenue hit would be. Dry copper is $9/pair wholesale, according to two documents I've come across. <<
Bill, these numbers vary widely. Ask T and FON. Some integrators I've spoken with in NY City and Westchester county have been quoted between $22 and $27 a pop. Not one of them ever came back to me with anything wholesale from NYNEX, at the time, under $20. The rationalization for this is that the loops have to be prequalified and in some cases, "engineered." Right. Like in the Big Apple, where the longest loop is probably something like 11,000 feet into some tenement building in Greenwich Village or Washington Heights in upper Manhattan. <scratch scratch> OK, so there are some bridged taps and a couple of load coils in NY City. But they only get removed once, and usually en masse!
>>Retail, LECs are getting $35-45 for residential services and between $150 and $1500 for traditional commercial data services loops (56-T1).<<
No doubt. But here we run into the phenomenon known as "demand creation," where nothing existed before. In other words, cheaper services which have enhanced value associated with them have a way of boosting the overall numbers of all services sold. The classic example of this can be seen when the price of voice services declines dramatically as in VoIP, there is a corresponding two-fold or more increase in the volume of all calls made. The service usage delta on the up side, is far greater than that of the price decline on the down side, if the decline is significant to start off with.
The problems with the ILECs is that they are not well-positioned in this new marketplace to capitalize on the rules of economics that make such a market place profitable for others, in the first place. And for that, we all must continue to pay the price, until competition, in whatever form, kicks in.
>>If competitors co-located in every BellSouth POP and offered competitive services over loops purchased at wholesale, BellSouth's $8 billion loop fees would be reduced to $1-2 billion. This includes the impact of the elimination of second lines here.<<
I don't think that it's that bad. First of all, no such tidal wave effect could take place. It would be a gradual thing. I think that BellSouth would still realize their billions in revenues even over the longer period when integrators were fully deployed, while they (BellSouth) pursued building out their future platforms. BTW, what _is_ BellSouth's current intent in that regard?
And like I said earlier, if they gave up some copper, they would also be positioned to scale back on certain overhead costs, and SG&As. In a way, it would be like they were outsourcing to a selected group of contractors, if they played their cards right. Think of that one for a moment. How would resale of their loops to qualified integrators and xLECs differ from their outsourcing the same services to a group of contractors? Sure there are differences, but are they material ones?
They would suffer more from not being in a good position to compete in the new IP, and to a lesser extent the ATM, services models. To use your own words in making this point:
>>My point is that ILECs are incapable of delivering these services...<<
The rest of what you've stated I find no opportunities to quibble with:
>> Competition is not here yet. xDSL is less than 1% deployed. Cable modems less than 1%. The ILECs could easily hiccup the deployment of residential ADSL by claiming spectrum interference on a binder by binder basis. Again, the goal would be to delay. I agree with the potential market implications you cite for higher level services, but
without reasonable performance, those services will not matriculate.<<
Amen, for now...
Best Regards, Frank
ps - yes, I'm still using an elastic keyboard. <s> |
