Dan,
>>...are the CLECs well positioned to take advantage of the
new xDSL and IP technologies? Is the Sprint game a game
for "BIG players" only? I live in California and PacBell is
already complaining to the FCC that CLECs such as
COVAD are cherry picking PacBell's business customers
with DSL. Its starting to take down some T1s and ISDN
circuits.... Finally, if you think the current $150B local
voice market will be only worth $60B then is it not obvious
that the LECs (i.e. RBOCs) will find it tough to grow
10-15% while the CLECs which are starting near zero and
cherry picking business customers will experience high
growth rates? Best wishes, Dan<<
I'll take your points one at a time, and hopefully you and
others will join in to add to, contest, or corroborate what I
have to say.
>>Are the CLECs well positioned to take advantage of the
new xDSL and IP technologies?<<
The CLECs have several ways to get DSL deployed, and
then IP becomes a secondary consideration, normally. For
the most part, CLECs must resell type-2 services (resale of
ILEC local loops) in order to obtain access to the necessary
copper lines to make xDSL work in the first place, since
CLECs do not deploy copper outright, ordinarily. CLECs,
for the most part, are deploying high capacity fiber, and in
some cases wireless, neither of which, by definition, are
directly conducive to native forms of xDSL.
Another way for CLECs to deploy DSL is through the
creation of a fiber optic backbone connection to a large
building or campus, or even a neighborhood, installing
DSLAM nodes or DSL concentrators (there is a difference
in the trade) on prem, or in a centralized main distribution
location, and then fanning out new copper, or reusing
existing copper, to residentials and/or other campus
occupants.
Some of the new ventures I've come across have taken this
approach, typically equipping building complexes (both
residential high rises and business campuses) in this
manner. As you can see, this is not exactly taking direct
advantage of installed copper, but it is a means for them to
get their high-speed goods to market, nonetheless. Also,
depending on the scale of the targeted market segment and
what the resale charges are for the copper otherwise, this
may be the most profitable way for them to go. Not always,
though.
ILECs, on the other hand, have always had the upper hand
in their ability to deploy DSL, since they are the
gatekeepers of their own copper lines. Many of the copper
lines, however, in urban areas serving businesses, at least,
that could have been used for DSL have since been retired
and pulled out, or otherwise rendered unusable, in favor of
fiber optic upgrades. And for excellent reasons. Digitized
fiber is eminently more friendly to administration and
logistics then copper, when provisioning new services and
administering to moves adds and changes. Which is a good
lead in to replying to your next observation:
>>I live in California and PacBell is already complaining to
the FCC that CLECs such as COVAD are cherry picking
PacBell's business customers with DSL. Its starting to take
down some T1s and ISDN circuits....<<
I suppose that PacBell wasn't quick enough with its fiber
builds to those areas, eh? <g>
PacBell has been in the best position for the longest time to
get those services out to the public themselves, so I don't
think they have a leg to stand on, unless they can
demonstrate the need for fiber upgrades for the betterment
of the communities in question. That one can get real
touchy, however.
What they are really chagrined about, apparently, is the fact
that they are facing some real competition, and their aircraft
carrier overhead is probably just too unwieldy to adjust in
time to blunt the effects of that competition. Not an
unfamiliar song, since they've probably, and very recently,
justified their higher rates with the PUC so they cannot
easily backtrack to lower pricing incentives where DSL rates
arc concerned, overnight.
IOW, if PacBell recently denied favorable resale discounts
to AT&T because their costs for loop administration and
capital were so high, then how can they arbitrarily adjust
the rates they charge for their own DSL in order to compete
with the COVADs of the world, i.e., in order to fend off
competition? Of course, this all assumes that they would
actually 'want' to compete in this area in the first place.
I think that it interesting to note that the fiber upgrade
path argument represents a dubious condition which amounts
to discretionary powers that ILECs have at their disposal.
It could be viewed by some as an unfair form of advantage in
that ILECs may in this manner dictate overall availability of
DSL to any given location. Making or breaking the case for
copper replacement with fiber is an accounting art form all
to itself.
>>...if you think the current $150B local voice market will
be only worth $60B then is it not obvious that the LECs
(i.e. RBOCs) will find it tough to grow 10-15% while the
CLECs which are starting near zero and cherry picking
business customers will experience high growth rates? <<
Excellent point, but let me qualify what I meant first. The
selling price of equivalent services such as LD voice, and
eventually all voice, are dropping rapidly, and may
continue to do so through the use of IP techniques. For the
equivalent amount of voice traffic , minute by minute, we
may see a dramatic reduction (as much as 50% to 70%) in
its market value. But the other side of this must also be
taken into account, and that is that with reduced costs the
traffic levels are bound to increase by some factor, probably
offsetting, and then some, the effects of the lower costs.
The question then becomes, who will be the beneficiary of
this, or who will corner this market through the use of new
technological capabilities at the time that it makes the most
sense to deploy?
IMO, the ILECs have time and market/subscribership
momentum on their side. They can do next gen the right
way, at a critical juncture, with architectural qualities that
the startups will not be able to match easily because today's
startups will still be depreciating (and paying for) second
and third generation platforms, and they'll be caught off
guard by the larger ILECs' entry into the IP model with
superior platforms. Also, today's startups will still be
struggling to retrofit their platforms to comply with
those of the ILECs at some point, because the ILECs will
wait for the standards issues to stabilize first, and then
deploy, and the startups will not want to be stranded from
the greater population of traffic at that point, due to
incompatible protocols.
I should caution new-age enthusiasts that this
syndrome is nothing new, and has been repeated too
many times, in too many niches, to list here.
At least the potential exists for this scenario to unfold.
Whether the ILECs take this approach is another story. As
I've stated elsewhere, it's still unpredictable at this
time whether or not the ILECs will want to be in the business
of offering discrete services, and whether or not they will
elect, or be forced into, a more utility-oriented role, such
as the one that may serve Sprint's ION and other like
initiatives.
>>Is the Sprint game a game for "BIG players" only? <<
Their channel distribution scheme is still unclear to me,
although there has already been talk that they've come to
terms with several BOCs for DSL loop resale. In T's
remarks the other day, they too dropped a hint that their
means of local service deployment, likewise, may lend
itself to disparate players. I suppose it comes down to ease
of administration, conflict avoidance, and certain
makes-sense factors, such as the size of any given player,
regardless of which major category they fit into.
FWIW, and comments are welcome.
Best Regards to ALL, Frank C.
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