data clecs put designs on access
November 13, 1998
Inter@ctive Week: The battle to capture the local market for high-speed data access isn't being fought only in the major U.S. markets. It's also playing out in the halls and meeting rooms of the U.S. Federal Communications Commission.
The new generation of local service providers that specialize in faster Internet and data access services is vigorously pushing the FCC (www.fcc.gov) to make some basic changes in the way local loops are resold by incumbent carriers to accommodate more rapid deployment of technology that enables faster data access.
Their efforts are being supported by equipment vendors that want to see gear such as Digital Subscriber Line (xDSL) technology move into the network more quickly and that see the current crop of data competitive local exchange carriers (CLECs) as the best option for achieving that.
"We would like to see physics set the only limitations on what services can be offered, not policies," says Gary Bolton, senior xDSL business manager at Northern Telecom Inc. (www.nortel.com), which last month took its 1-Meg Modem equipment, along with customer testimonials, to Washington, D.C., to demonstrate to the FCC what it could provide.
The vendor and data CLEC arguments are being made as part of the FCC's inquiry into what is known as Section 706 of the Telecommunications Act of 1996. That section requires the FCC to promote the widespread deployment of broadband data networks. The incumbent telephone companies are asking the commission to let them offer data services on a long-distance as well as a local basis under the terms of Section 706.
One relatively new concept that has arisen in those discussions is that of spectrum unbundling: allowing a data CLEC to sell a higher-speed service in the upper-spectrum ranges of a copper loop, while the telephone company continues to support voice service in the usual 4-kilohertz band.
"Section 706 requires the incumbents to unbundle the network at every technologically feasible point," says Phil Kyees, business development manager at Paradyne Corp. (www.paradyne.com), which manufactures xDSL and other fast data access equipment.
Spectrum unbundling wouldn't be hard to do, Kyees says.
"When the line comes into the central office, it would terminate at a splitter on the Main Distribution Frame," Kyees says. "The voice signal would go into the voice network, and the data signal could be handed off to whoever was providing the data service."
Spectrum unbundling becomes important as unused copper lines become scarcer, says Chuck Haas, vice president and co-founder of Covad Communications Co. (www.covad.com). And that crops up more frequently in residential areas, where the demand for second and third lines often outpaces network planning done before personal computers and fax machines were common household appliances.
Data CLECs maintain that much more could be done to make the local phone network friendlier to faster data services. For example, they would like to see standard pricing of and definition for a local loop.
"Congress left it to the states to determine pricing, but in our minds, the FCC could set rules for determining pricing," says Dhruv Khanna, vice president and general counsel and a co-founder of Covad. As it is, he says, a CLEC pays as little as $3 for a loop in Chicago, and more than $30 for a loop in Dallas.
"When you have to pay $30 for a loop, there's no way you can have a residential [x]DSL service," he says. "It just wouldn't be cost-effective."
The very definition of what constitutes a loop also may vary. Companies that want to provide xDSL-based service usually are told by the local incumbent that they must buy a "digitally conditioned" loop, or one that has had analog equipment, such as load coils to boost an analog signal, removed.
"It's possible to have the loop qualification be very simple," Kyees says. "If it's nonloaded, a CLEC should be able to get access to it and offer whatever service can be offered over that loop."
Companies such as Nortel Networks and Paradyne have developed technologies intended to provide faster data access over copper loops that are longer than normal or not in top condition. In addition, the development of the new G.Lite standard, which delivers data at 1.5 megabits per second downstream over most copper loops, is intended to make faster access services available to a broader range of people.
By saying a loop has to be digitally conditioned and able to support a minimum bit rate, the incumbent phone companies may actually slow down availability of faster data access. "Saying a line has to support a minimum bit rate before they'll turn it over to a CLEC sounds like a good thing," Kyees says. "But with today's rate-adaptive services and the pent-up demand for faster Internet access, why not provide a best-effort faster Internet access service for residential customers?"
Finally, the data CLECs want the FCC to set rules on spectrum compatibility as well. Some incumbents refuse to turn over copper loops because they claim the service offered will interfere with their existing services. Vendors and data CLECs want the FCC to stipulate that some widely used services, including different versions of Asymmetric DSL, High-Speed DSL and services based on Integrated Services Digital Network, fit within the public network spectrum guidelines.
As it is, Kyees says, some Bell companies have set their own guidelines for spectrum compatibility and made them more rigorous than necessary. "It's hard, as a manufacturer, to aim for a moving target in designing products to be spectrally compatible," he says.
The FCC could rule on Section 706 and spectrum unbundling as early as January 1999, issuing a notice of proposed rulemaking that would also cover issues such as whether the Bell companies would have to set up separate subsidiaries to offer advanced data services.
CORRECTION
In the Oct. 19 issue, a story on Qualcomm Inc.'s spin-off of Leap Wireless International Inc. ("Qualcomm Takes Leap Onto Customer Turf," page I-16) misstated the value of Qualcomm's warrant holdings in Leap. Qualcomm holds warrants for 18 percent of Leap's stock at $6.106 per share, not 10 cents per share. The total value of the warrants was correctly reported at $33 million.
[Copyright 1998, Ziff Wire]
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