Hi Frank:
What do I think? Hmmm. First, I have never really understood how CLECs plan to compete with the ILECs over the longer term for the reasons you point out. But take a look at the market valuations of these stocks. So there is an obvious different point of view.
At present, it appears to me that the CLECs are enjoying the fruits of The 1996 Act. All they have to do is invest in new CO equipment, compel the ILEC to provide co-location space at the CO at a reasonable market rate & market the hell out of it. However, while this is happening I see the ILECs doing more thorough planning of a longer term strategy that involves a major investment in state-of-the-art equipment and a pricing strategy that will certainly cause on pinch on the present earnings picture for the CLECs -- IMHO.
Not well-versed on The Act, though I should be, I do not understand or know what obligation, if any, the ILECs would be under to share their upgraded plant with the CLECs. I would think that once allowing the CLECs access to the existing plant infrastructure to establish a competitive position in the marketplace, that any new investment by the incumbent would not necessarily fall under "must carry" rules of The Act. Would this be correct? Is this what you are thinking? If so on both, then I would agree this very well may be the incumbent's strategy.
On the other hand, such a policy would lead to a redundancy in the local loop. Is this what the Act was designed to do? Or would the ILEC be under some obligation to provide some of this new & expensive capacity to the CLECs at a rate commensurate with a reasonable return on investment? The market seems to indicate, if it is as sophisticated as I would like to think, that the CLECs are not necessarily vulnerable in this respect. What do you think?
BTW, Frank, what's the "D" in "DLECs" stand for? DSL? Digital? |
