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FCC Abandons Linesharing, Kills DSL Competition
raygundan writes "According to Reuters, the FCC today decided to greatly curtail the laws that force incumbent phone companies to share their lines with their competition at cost. This does not bode well for companies like Covad Communications who provide DSL using phone lines to bridge their data networks over the "last mile" to customers. The new rules do force line sharing as long as companies are willing to offer voice service, but this essentially states that if you are not already a phone company, you cannot offer DSL. The existing rules will be phased out over three years. There is still some hope, however, that a federal court might strike down the FCC ruling. Oddly, the news agencies seem to be reporting this as a minor change to the rules, rather than an end to all non-ILEC competition in DSL." The FCC's front page has links (luckily PDFs as well as Microsoft Word files) about the decision, including statements from each of the commissioners.
It is all done over the phonelines, but there many many DSL companies competing (although only a few get mainstream attention). The competition gives the 'hardcore' internet users much choice, but in the end the DSL network is all owned by BT.
Yes I work for a Non-Bell ILEC and frankly why should "my" infrastructure be used for someone elses profit. I wouldn't like it if Bell tried to bully their way into one of our markets, why should I be allowed to steal from them.
Yeah, the problem is though that the government subsidized the creation of Bell's infrastructure in the first place.
I don't know all the details for sure, but the two folks I know at Covad are saying that it can't be VOIP or VoDSL, it has to be traditional voice service. The way the FCC's crack-addled thinking goes is something along the lines of "why should Covad be allowed to sell only the GOOD half of the phone line? let's force them to pay for the crappy half, too!"
Never mind that the crappy half is already strung to every house everywhere, and the running redundant phone wires is both wasteful and counterproductive.
ATTBI is raising it's prices because it's no longer AT&T, it's now Comcast. I had comcast where I used to live, get ready for worse service for more money....
Blessed are the pessimists, for they have made backups.
If I laid out a serious amount of money to establish COs and copper to (nearly) every house in the United States, I'd be a little pissed at the government for making me open it up to people who are offering competing services.
Technically, the Bells really should be able to lay down the law when it comes to who access their cables. I mean, it's their cables.
I'm all for competition, but this is kind of an awkward situation.
The point you're missing is that the Bells, unlike say McDonald's being forced to let Burger King use their extra grills, have a monopoly in the last-mile telecom arena. What's more, it's a government-sponsored monopoly. That means that the Bells have, as a condition of their monopoly, certain restrictions and responsiblities that other industries don't.
The Bells can stifle any sort of telecom competition simply because they DO control the wires going into your house. Thus, the only way to ensure any sort of telecom competition is to force the Bells, as a condition of their maintaining their utility/monopoly status, to open their networks to competitors at reasonable prices.
Requiring companies to lease their lines at cost is *REGULATION*, not deregulation.
Deregulation is letting those who own their lines lease them at the prices they want to, or not at all. See any regulations there?
Exactly.
Best example is the California power system "deregulation" that caused all those blackouts - what was billed as "deregulation" wasn't deregulation at all - just a different set of regulations that turned out to be much, much worse than the old set.
Point of the matter is you should not trust anyone's opinion on what deregulation will do if they do not even know what deregulation is in the first place.
paintball
I'm sick of re-re-re-posting the exact same thing in response to comments like this, but here's one more go at it:
1. The CLECs pay the ILECs the same for the lines as the ILECs pay themselves, unless local governments change it. In that case, it is stupid. Fair is fair.
2. Those lines are build on public land with tax money. The ILECs are not the only party with money invested there-- you and I paid for that stuff, too.
3. Do you remember there being any DSL BEFORE they were forced to open their lines in 1996? No? Thought so. Remember ISDN and $1500 T1 Lines? DSL is an old tech that could have been deployed back then. Why didn't they? Because with no competition, there was no incentive to upgrade OR lower prices. The fact that we have DSL at all is a direct result of the competition jump-start that act gave the market.
The government may not own it outright, but if the government's going to use my money and public land to benefit the ILECs, I think it's close enough. If you think sinking government money into a private company in return for nothing is a good idea, well, that's bullshit too, junior.
As if your company PAYED for the bloody lines in the first place !!!!!! NO I THINK NOT. They got HUGE government subsidies, and enormous amounts of tax dollars in the way of "recovery" surcharges, not to mention the government arranged, read forced the right of ways needed using emminent domain, and THEN PAYED for the Fair Market Value of the access property. All the Bells have EVER HAD to do was maintain the lines and grow FAT on the profit, and they can't even do that.
"I mean hell if they were allowed to sell DSL AT COST you people would still throw a shit fit because DSL lines ARE EXPENSIVE!"
NOT, they are just bloody existing copper lines. If a responsible entity had DONE ANY sort of decent upkeep over the last 40 years, there would be no issue, but instead they sucked up the profit, blew it on useless expansions in areas that were NOT their field, now they want us to pay for their mistakes...I say we nationalize the infrastructure, it is after all a BUSINESS REQUIRMENT these days, and then appoint someone to operate it and let the bells become tenants just like everyone else.
Note, I don't mean this as a personal attack, it just sounds like you are leaping to the defense of your employer....Archfeld
errr....umm...*whooosh* *whoosh* Is this thing on ?
It wasn't government granted monopoly either. Bell & AT&T existed because they were the biggest, and existed long before anti-trust laws.
That's partly right. But the AC had the bulk of it right, too.
Early in the history of telephony -when it was still local - there was competition. And the competing companies refused to interconnect and complete each other's calls. (In particular, Bell, the big gorilla, refused.) So businesses (like hotels, banks, legal firms, newspapers, telegraph offices, and cab companies) had to have phones from two or three companies to be sure all their customers could get to them.
Bell used their own reluctance to aid the competition to convince the government that telephony was a "natural monopoly" and thus needed to be regulated. (At the time gas and water distribution were considered to be "natural monopolies" because it would cost N times as much to install pipes for N companies, so supposedly a monopoly under price regulation could deliver the service for less than the cost of multiple copies of the infrastructure.)
So the regulators set up a system where "franchises" - regional monopolies - were given to various companies. Of course where a local phone company already existed it got the franchise, and where multiple companies existed the big guy typically got it and the little guys had to sell him their equipment (or trade it for equipment in a less-lucrative market they also shared).
If I recall correctly, Bell was the big gorilla at the time because it had had selective access to Bell's patents, another government monopoly. (Bell made it to the patent office a half hour ahead of another inventer with a virtually identical device.) So in the early days Bell had the best equipment and others had to work-around, and once the patents expired Bell was the big kid on the block.
Under regulation the prices were set at levels that guaranteed Bell about a 6% return on investment - and whenever it dropped below that they could petition for and receive a price hike.
(Bell Labs actually existed to spend as much money as possible on research vuagely connected with telephony, because for every dollar spent there Bell could bill customers $1.06. It was the biggest failure of the system, because basic research pays off big. Virtually from the start they made more money licensing Bell Labs inventions than the lab cost.)
As long distance became possible, Bell (who had by then bought out most of the little guys, except for some rural co-ops and small towns wired by the likes of General Telephone) became the regulated monopoly for interconnecting the cities.
Bell continued to be a government-mandated monopoly until a series of court decisions.
First the Carterphone decision led to the "foreign attachments" tariff - and you could stop renting a phone built by Western Electric (Bell's manufacturing subsidary) and hook up one bought from an independent manufacturer. Phones went from a paper cost of hundreds of bux to cheap disposables over a few years.
Then Microwave Communications Inc. (MCI) took advantage of that tariff and inflated long distance charges by setting up their own inter-city microwave hops, renting local lines, and bypassing Bell. Bell sued, MCI counter-sued for antitrust, and the fallout was that not only was MCI (and others) allowed to continue, but Bell was required to let them hook up on the same basis as Bell's own long-distance operation. And to keep Bell from playing accounting games to subsidize unregulated long distance from monopoly local bills, Bell was split up into AT&T (long distance), Lucent (Western Electric & Bell Labs), and a handfull of "Baby Bell" RBOCs (Regional Bell Operating Companies) to continue the monopoly local/short-range long distance service.
Meanwhile, virtually all the local copper was installed by Bell Telephone or the Baby Bells while they were regulated monopolies, with government-mandated monopoly pricing for their service subsidizing the cost. A new competitor in a deregulated local phone business would have to wire a whole city and then pay for it with money made while charging less than the established RBOC, which is sitting on paid-for subsidized copper and can cut prices to the bone. Can't be done.
Eventually the RBOCs were allowed back into the long distance business - at a price. They had to provide DSL service and rent their local copper to upstart competitors at a wholesale price. It seemed like a good idea at the time, because the long-distance service was where the money was. Players there were mostly AT&T, MCI, and SPRINT. (The Southern Pacific Railroad had strung fiber along their right-of-way for their own communication. Fiber has a LOT of bandwidth, so they rented out the surplus bandwidth by becoming a long-distance phone and long-haul data carrier.)
But about the time that deal was cut, several upstart long-distance companies completed THEIR long-haul fiber loops, and the price war started. Suddenly the Baby Bells had no revenue from the shiny new long-distance operations. So they started dragging their feet on the DSL deployment. As for installing more copper to expand their own service and rent to their competitors, it no longer makes ANY sense with the only revenue coming form local service. So they won't do it until the ruling is reversed.
Meanwhile the competitive local phone carriers never really materialized (except for the cable operators, who also had existing copper installed). And the little DSL ISPs - except Covad which re-organized out of bankruptcy, dumping ITS startup costs - are pretty much dead, from their own price war (and from the local Bells' tendency to raise their service costs by screwing up their local copper). So from the regulators' point of view the competitive market they're trying to protect hasn't, and won't appear. Thus the release of the Baby Bells from the wholesale price controls, in the hope they'll start installing more cable.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way