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Technology Stocks : Westell WSTL
WSTL 5.970+2.1%3:51 PM EST
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To: Trey McAtee who wrote (12822)8/26/1998 5:32:00 PM
From: Vladimir Zelener  Read Replies (1) of 21342
 
Trey,

I still do not see how ILECs can benefit from FCC ruling. I think FCC talks a lot about allowing RBOCs to set up digital networks, but when it comes to looking closer the conditions imposed by FCC (spinning off subsidiary, and allowing competitors to have the same deals as a spinned off company) negates all the benefits IMO (maybe this is why BEL is not happy).

The only way for RBOCs to make money and keep the local monopoly going in according to this ruling would be :

1. Set up subsidiary CLEC with inflated cost base
2. Lease them local loops at highest tarrifs allowed (lets say $30 to $50 a month for local line)
3. Sign a contract for leasing CO space at the highest possible rates

In this case the created subsidiary CLEC will operate at great loss, while mama RBOC will collect the profits. This will block any independent CLEC and LD and ISP from getting into same kind of arrangement. I am not sure that RBOCs will be able to get this schem though though. I am sure LD and ISPs and independent CLECs will chalange such an arragement in Federal court, don't you??

<<now, they wont have to do that. the ILECs set up a CLEC subsidiary, which then negotiates a deal with the ILEC, just like any other CLEC. >>
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