FCC Should Apply Telecom Act’s Provisions to IP Technologies, CLEC CEOs Say

Whether the routing technology is based in TDM or IP doesn’t change that competitive providers need access to the last mile, said the CEOs. In much of the U.S., the incumbent is the only provider with a physical connection into a building, they said. The CLECs said their need for access doesn’t change because the technology used to deliver the service changes.

When the FCC gathers data about the state of the special access market, it will find what industry consultants have already learned, said Larissa Herda, CEO of tw telecom: Much of the U.S. has only one carrier in most of the buildings. “When it comes to IP transition, I think we have to be agnostic” about the fact that “technology may be changing,” Herda said. “The key is to make sure that the responsibilities that the carriers have had in a TDM world flow through in any technology change."

ILECs often say CLECs should be shouldering the responsibility of building fiber to buildings rather than depending on access from incumbents. CLECs would prefer to build their own facilities, said Windstream CEO John Gardner. It’s a “fallacy” to say CLECs don’t invest because they want to use other people’s networks, he said. “You really want to find a way to build it, because you're the master of your own destiny,” he said. But costs are sometimes prohibitive, he said. “If we had to build, in every case, the last-mile access, it would be bad for our customers, prices would increase, and ultimately there would be fewer options."

Tw telecom has spent $4 billion building facilities, and 70 percent of its traffic rides on its own fiber network, Herda said. But tw telecom depends on access from the incumbents, she said, saying she was “concerned” about AT&T’s special access tariff filing (CD Nov 26 p3) that “effectively raises rates.” That AT&T is in a position to raise prices and not worry about losing customers as a result shows it has market power, she said.

Herda doesn’t buy AT&T’s explanation that it’s trying to get CLECs off of TDM technology and onto IP networks. Six months ago, tw telecom negotiated a new agreement with AT&T and asked to transition some of its connections to IP, and “they penalized us,” Herda said. “Instead of encouraging us to move to IP, if we don’t meet their numbers of TDM services that we're buying, we pay penalties if we want to move over to ethernet. It makes absolutely no sense.” If AT&T were serious about moving CLECs to IP, it would provide incentives rather than penalize companies that try to make the switch, she said: “Actions speak louder than words.” AT&T continues “to meet with our customers to understand their needs,” a spokesman told us. “We will be flexible in meeting those needs as we move forward together in this transition to more efficient IP-based network and services."

XO has an “extensive fiber network, but it doesn’t go everywhere,” CEO Laura Thomas said, arguing the CLEC still needs access to the last mile. “Our business customers really rely on our solutions,” she said: If XO loses access and customers lose their choices, “We could go back to, ‘Oh, you have one choice in the color of your phone: black.’ Remember that? We don’t want to go back."

Herda wondered why there’s such a focus on moving away from copper. “There’s a lot of infrastructure out there. It’s been bought and paid for,” she said. Companies such as AT&T are using it for U-verse, she said. Thomas said the copper network will continue to be in place for decades. Bruce Mehlman, co-chair of the Internet Innovation Alliance, took issue with what he called a “rear-view mirror approach.” CLECs “cling to old 20th century telephone networks and the desire to preserve the status quo,” Mehlman said in a written statement responding to the panelists’ comments. “In their call for greater government intervention, however, not one CLEC provided evidence or offered a substantiated claim of an existing market failure. Rather than invest and compete in a vibrant and robust broadband market, CLECs seek FCC intervention to prop-up business models based on a dying copper network.” The alliance’s members include AT&T. Melhman said that market forces will allow for interconnection agreements and access to networks “if only regulators don’t rush in to dictate a false ’solution’ where the market is working.”