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Et Tu Covad? 260 Central Offices To Close
Mr. Haplo writes: "It seems that Northpoint isn't the only CLEC going through troubled times, these days. According to this article, Covad Communications is planning on closing 260 central offices. This bodes not well for those of us trying to avoid the stranglehold of the ILECs."
The point of the closures isn't that it is Covad losing business and going down or anything bad that you suggest by saying "it serves them right." If you had understood a word of the article, you would've noticed that they only closed down offices in small markets in podunk towns. When Covad opened shop a few years ago, they opened up a billion offices all over the place. In the small markets, nobody was really buying DSL so it doesn't make sense anymore to keep that office open. They still have a ton of offices in major markets and are still the market leader of backend DSL providers.
IANAL, but I play one on
All your high-bandwidth wire are use Marxist dielectric.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
Market failure: the inability of the market to provide for the effective distribution of some goods, especially social goods.
One social good the market will not provide is choice.. the choice to select cheap, independent online service based on telephone lines. Existing telephone lines, which are regulated, not owned by one company or a few companies, like much of the new cable that is laid every day.
The market as it is currently set up will offer us service from a very few providers, each of which will choose its own reaction to government oversight and regulation, copyright protection, file sharing, etc.
The fewer such providers there are, the less options we will have in terms of specialized services, additional security, unorthodox attitudes towards security and privacy, etc.
The standardization of ISP services is at hand...not due to the choices of thousands of Internet users but because of a ruthless economic slowdown which is taking out businesses without a chance to test the true utility of their strategies, technologies and social models.
Once it's safe again to start something up, we will have to re-invent the wheel, to recreate the quality service and specialized perspectives of the small ISP's-- if the regulatory regimes crafted by the monopolies will still allow it.
Goat sex free since 2001
Hey, out of curiosity, how much "extra" do you think they charge for T1 connectivity? I mean, let's forget the local loop part -- that's a given. But $750/mo for 1.54Mbps? I get calls EVERY WEEK from DSL-equipped CLECs/ISPs offering me 2Mbps bidirectional for $500/mo including the router (which is probably some cheesy desktop thing with no features, but hey).
I think "T1 internet access" is, other than the loop, a royal butt banging. I *know* I'm not getting any better technical support out of the deal and the "free" CIDR blocks that come with it are nice but don't really cost the ISP anything. SMTP queing and single name DNS hosting? Yah, more "high cost value added."
Given that any ISP with anything more than wet dreams about competing in the corporate ISP field needs AT LEAST one DS3 or even OC-3 and a couple of T1s to multiple providers, it's not like they're starved for bandwidth, either.
I'm starting to think that T1 ought to be dirt cheap, at least cheaper than 2Mbps DSL. The tech is as old as the hills and the equipment to support it at high densities should be at least as cheap as DSL if not cheaper. The local loop will probably never be cheap, but at least the net connection ought to be.
The largest benefit of a T1/DS1, T3/DS3, or OC-class circuit is the quality of service. You get a point to point connection with loads of guarantees. Hardware troubleshooting (on both ends) is usually available around the clock, often with little more than 15 minutes of leadtime. Bandwith almost never an issue as most Tier-1 providers (sprintlink, uunet/worldcom/mci, cable&wireless, etc) have enormous headroom, oftentimes over 40% above any concievable usage. If a problem occurs, it's fixed fast and by someone that knows what they're doing. -- MOST of the time
This is not to say that many xDSL and cable setups *aren't* good. There are MANY excellent such setups, some even offering quality guarantees and excellent service, often times providing MUCH better bang for the buck.
It all comes down to the reputation, support, quality, and even scalability. If I were to start a large business, I'd probably get a fractional T3 from sprintlink. The pair of fiber (who uses a pair of coax anymore) that would come to my office could then easily be upgraded to support full or muliple T3 circuits in the future. AFAIK, a typical cable or xDSL circuit will probably never support more than 25 mbit, which, even then, would probably require the user to be 50 feet from the CO.
Bottom line, try to get a reputable cable or xDSL setup until you can afford or need something better. Wait for that IPO before you order a full T3 for the den.
I think you are misunderstanding me. It seems that you reading my initial post as "It's about time I posted first!", when actually it is intended as "It's about time Covad went down!" Agree or disagree with my post, but don't knock me for simply posting.
I'm against picketing, but I don't know how to show it.
I worked for Covad in a position that gave me a unique perspective in where the company was going and what their business plan was. Fortunately, I got out last year when I saw warning signs, months before the axe fell. What has happened is just a symptom of a fundamental shift in the marketplace.
Covad was the first major CLEC (Competitive Local Exchange Carrier) in the DSL marketplace. CLECS were essentially created by the Telecommunications Act of '96. Basically, the Telecommunication Act allowed two main changes in the law:
1> It allowed for local phone companies to offer long distance service.
2> It allowed for CLECs to exist, essentially using phone company lines for a fair market value. It made the right for phone companies to offer long distance contingent on them opening their lines up fairly for CLECs to do their job.
Covad started in the San Francisco bay area, fertile ground for a DSL company. They were first in the market, with about a 6 months lead on Northpoint and Rhythms when it came to their number of subscribers and their ability to roll out services effectively. They have done a good job of maintaining that lead, too.
Originally, DSL companies competed for business locally... but when the glut of investment capital came rolling in, it became obvious that there was a huge demand for broadband and not enough supply. The way that DSL companies dealt with this was to spend billions on rolling out their networks and putting equipment in as many central offices as possible. In many cases, these central office deployments were redundant... Small marketplaces would have the choice between 2-3 CLECS, plus the local phone company in order to get DSL.
Why were companies like Covad willing to put equipment in locations that wouldn't return a profit anytime soon? Because, in a bull marketplace with a glut of investment capital, what was going on was essentially a landgrab. The first person to "drive their stake" into a marketplace and to get their message across would be the dominant player in that market... eventually. How could they be sure? Because, once people have DSL, they don't want to go back to dialup, and they rarely ever switch DSL providers.
As we all know, the stock market soured and the venture capital money has dried up for the time being. Now, the stakes are higher for these companies... they either have to achieve profitability before their warchests run out (say, 18 months for Covad and Rhythms)or they have to sell out all or part of their business to their current phone company competitors.
When I was at Covad last year, I could tell you... they brought on a ton of people, constantly. They developed an absolutely annoying, gluttenous amount of middle management in no time flat. The people who really knew anything were stuck in meetings all day and weren't able to get anything done, and there were a lot of new people who were very inefficient, often causing more work than they were performing.
In other words, I'm glad that Covad has laid off so many of these new workers. I'm glad that they're willing to pull the plug on deadbeat customers... and I'm glad they are willing to remove equipment from locations that just don't pay. I am certain that Covad will be the first CLEC to achieve profitability... and profitability will give them the creds to get back in the favor of investors and VC's... the first to reach profitability gets to grow again, essentially.
Not that Covad won't grow this year... it will concentrate on what gets them the bucks: business installs easy residential customer self-installs. If you want to be profitable in a short amount of time with a DSL company, you can't be rolling out a install truck a half-dozen times just to set up a line for a customer paying $45 a month. That's why self-installs are so important. Covad has great testing and line qualifying equipment. They can easily determine whether a residential customer's line is able to be handled with a self-install or not. If it is, they do the deal, if not... let the local phone companies pay to fix up their crappy lines! Covad has been very successful with their self-install program, which gives them an edge over Rhythms in this respect.
Covad also is and has been very successful with business customers. Business customers are very important, and the DSL lines offered to business customers bring in more revenue and more profit than residential customers. If you want to maximize profitability, you have to concentrate on businesses first.
What are the longterm ramifications of the DSL CLECS falling on hard times? Probably this:
1> Some CLECs won't survive. Some will sell out to local phone companies, too.
2> Phone companies will get a larger proportion of the DSL marketplace than they might otherwise have gotten.
3> In the short term, there will be less of an incentive for broadband providers to compete with each other on a price level. Don't expect price cuts anytime soon on broadband. Demand still outstrips supply.
4> DSL will take somewhat longer to catch up with the growth of cable-based broadband in the U.S. All statistics still point to DSL access growing faster than cable broadband access, however. Cable-based broadband is also expensive to roll out service for, and money is tight everywhere. Eventually, DSL should outstrip cable in the marketplace. Let me make one thing clear... there will be no winner in the broadband marketplace until there is a clearly superior technology. Neither DSL or Cable will "win"... but we will see profitable companies in DSL, cable, and wireless.
What should be the biggest concern about this issue for consumers? Ultimately, it's all about choice. Choice means competition and lower prices, after all. It's that much more important to pay attention to the decisions in front of the FCC and Congress and to make sure that the interests of consumers are met and that the marketplace is kept friendly for CLECs and, ultimately, for competition. Normal people can and do influence FCC decisions, and it is worthwhile to point out that some of the worst decisions by the FCC are those that only get a handful of responses from the public. Want to make your opinion actually count? Don't just voice it here. Go to http://www.fcc.gov, keep up on what's REALLY happening, and let your voice be heard on the issues there. The last I heard, it was your government, after all...
IANAL, but AFAIK, I have no idea what he's trying to communicate when he says "CLEC" and "ILEC."
This is, of course, IMHO.
Friends don't let friends use multiple inheritance.
SpeakEasy (the BEST DSL provider, IMHO) has a great dictionary for keeping your acronyms straight:
l
For the link-fearing:
http://www.speakeasy.net/dsl/dsl_dictionary.htm
Or click Here
- JoeShmoe
-- I wonder which will go down in history as the bigger failure: the War on Drugs or the War on Filesharing
Covad doesn't compete much with cable modems or cheap consumer DSL. Their main business is SDSL to business. Rather oversaturated; several CLECs (not usually ILECs) sell in that space, and there's not enough business to go around. Covad might end up the survivor though.
The Incumbent LEC is the local telephone monopoly. A Competitive LEC is a company that leases your telco's infrastructure, e.g. NorthPoint, Covad, Rhythms, etc. The big ones are focused on DSL, but there are plenty of smaller CLEC's that are more interested in local phone service alone, or as part of a more comprehensive package they can provide (e.g. long distance, wireless).
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