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DSL Amidst Phone Wars
DrewCapu writes "The SF Chronicle has an article which talks about the battles between SBC and AT&T & MCI over supposed unfair practices concerning DSL and switching phone companies. All sides have their own spin on it. Can't we all just get along? Things have been heating up ever since SBC got closer to offering LD in CA."
I live in Alameda (near SF), and I can tell you that the article is not stretching the truth at ALL. I personally have DSL thru a small local ISP who partners with Covad, but when I moved to my new apartment, I still had to get a landline from SBC (as they've apparently cut off the likes of Covad from getting dry pairs with no phone account associated for DSL). More on topic, several of my customers have switched to other local carriers, and either had to give up DSL (for cable, which in Alameda is run by the very excellent Alameda Power & Telecom, but I digress), or keep one SBC line.
I guess having AT&T and MCI on "our" side is a good thing, though with the Yahoo!/SBC DSL crap SBC is giving out now, I don't know why anyone would want to stay with 'em.
Couldn't the same be said of SBC? I mean, if SBC continued to provide DSL service to those customers, then they too would "generate more revenue" than if they were to just hand it over to AT&T or MCI. Is it greed? Or do they just want to control our means of communication? They can't have it both ways.
While this tactic might seem counter-productive, serving mainly to make SBC look bad while rival services gear up to implement their own DSL offerings, it would be helpful to take a look at SBC's situation from the company's standpoint.
SBC's third quarter earning report show the company getting absolutely hammered on the earnings front, with revenues off 14 percent, down over a billion dollars from a year ago. This drop can be attributed to competition between phone services, and more importantly, the rise of alternative communications technology. While DSL subscribers are increasing steadily, the added inflow of dollars is being more than offset by the hemmorhaging in the phone services sector.
Thus it can be seen that big phone companies relying primarily on local and long distance phone service are seeing their traditional market being eroded away, and are panicking. Look for more tricks like the DSL service hostage stunt in the near future as lumbering Old Economy companies try anything to shore up their shrinking incomes.
Hopefully, companies like SBC will soon be willing to implement the kind of out-of-the-box thinking needed to restructure their companies for the (gradually...) emerging New Economy, and will leave these kind of lame tricks in the past. Until then, there's always cable.
Whoa! Let's clarify the rules -- it's a lot more subtle. More like Microsoft's monopoly than the old Bell System.
Anybody can open a local phone company nowadays. Lots of us have... but if you want to reach residential subscribers, you can't afford to pull new copper wire (old technology, very capital-intensive) to each house. That is a true "natural monopoly", which means that the cost to a competitor would be much higher than the cost to the incumbent, making competition unworkable.
However, there's no natural monopoly to various other aspects of the business. So for instance Bell competitors (CLECs) can rent the wire, at a regulated rate, and provide dialtone and/or DSL over it. Covad does this, for instance. The current regulations (which may change; the Bells are doing a full-frontal attack on them at the FCC, and chairman Powell's their lapdog) also require the Bells to rent their switches at wholesale to CLECs. So a CLEC can lease Bell copper loops and switches, and thus provide service with none of its own equipment. This is called the "UNE Platform" and is how most (though not all) non-cable residential telephone "competition" works. Note that if it's called UNE-P, the CLEC sets its own prices quite freely, vs. the declining-in-popularity so-called "total service Resale" where the CLEC is just taking a commission on Bell's regular rates. So UNE-P lets New York City and Chicago subscribers get flat rate service, without Zone charges; it powers MCI's "Neighborhood" too. Note that Bells are not required to provide DSL to CLECs as a wholesale service, so it isn't part of UNE-P.
The controversy: If SBC (or another Bell) provides the dialtone, then they will also sell their ADSL atop it. The price for residential ADSL is held down because the dialtone line is paying for the loop; SBC's own ADSL "business" gets the line for basically free. So can Covad -- they can rent the "high frequency element" of an SBC dialtone line for near zero. BUT if the SBC dialtone line is being provisioned on a UNE-P or Resale basis, so MCI or AT&T (etc.) is the end user's phone company of record, then SBC as a matter of policy chooses not to provide its DSL service. This is pure spite, not technology --the UNE-P line is identical to an SBC-service line, and the UNE-P CLEC is already paying for the loop.
The nice thing about UNE-P is that you can switch carriers without really touching anything -- it's a computer entry, of who gets billed how much by whom. But because SBC refuses to sell DSL atop UNE-P, they "lock in" voice subscribers by threatening to take away the ADSL. They're gambling that they'll make more money by keeping voice subscriber than they'll lose by having UNE-P subscribers switch to other DSL providers. And, more likely, they are just such monopolists at heart that they don't give a rat's ass about maximizing their own profit, if they can thumb their nose at a competitor.
This all has interesting antitrust connotations (no, Bells are not exempt from antitrust any more) but that will take years to play out.
Why do I need a voice line in order to get DSL service in the first place? I don't want a voice line and I can't be the only one.
Because of this, anyone who wants DSL must also pay (Verizon, in Los Angeles) $26/month for a voice line they have no intention of using.
Is it like that everywhere or just here?