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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (962)	7/13/1998 12:03:00 PM
From: Bill	Read Replies (3) \| Respond to of 3178

Frank, sorry for the delay in responding, a good weekend in the sun was my priority. I appreciate your comprehension and I'll try to address the substance of your comments, as I understand. Your key point is that higher layer services beyond the physical connection are the real value elements in the new local infrastructure. This is not in dispute. 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. This situation, of course, is fundamentally addressed by the Telecom Reform Act of 96 which requires ILECs to open their markets. However, 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. Don't underestimate how significant the revenue hit would be. Dry copper is $9/pair wholesale, according to two documents I've come across. Retail, LECs are getting $35-45 for residential services and between $150 and $1500 for traditional commercial data services loops (56-T1). 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. 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. Again, that's where the ILECs' control over the local physical loop comes in. Without a step up in end to end data rates, voice and video applications to the home are limited. So the longer ILECs delay real DSL, the longer those applications are delayed. Note that I am not even considering RBOCs offering these services themselves as a realistic possibility. That's a whole other chapter. As always, interested in your well-informed view...