SCOTUS Rules Incumbent Telcos Must Share Network Access At Cost

schwit1 writes with news, as reported by Bloomberg, which will likely have bearing on (like it or not) regulation of peering among Internet carriers: "Established local telephone companies including AT&T Inc. must share disputed parts of their networks with competitors at cost, the US Supreme Court ruled. The unanimous ruling backs the position taken by the Federal Communications Commission in a fight stemming from the 1996 law that injected competition into the local telephone business. The law requires so-called incumbent local carriers, whose ranks also include Verizon Communications Inc. and CenturyLink Inc., to share their facilities with rivals."

Comments

Good overall, however I question "cost-based"

[Anonymous Coward]

What does deliver the a la carte services at "cost-based rates" mean? Does that mean LECs who provide access to other locals can't charge for the added load on the network and are supposed to upgrade affected equipment out of pocket (and thus the contracting, generally smaller, LEC doesn't have to shoulder this cost) OR are they allowed to base this as part of the cost? That's my only reservation.

Re:Good overall, however I question "cost-based"

[cpu6502]

It means Verizon cannot charge $1000 per megabyte to XYZ Services to lease their phone or DSL lines. The ruling is intended to prevent Verizon (and other telcos) from blocking-out competition via outrageous charges.

This is a good thing. Now maybe instead of being stuck with Verizon or Comcast, I can choose some other ISP. Just the same way I can choose to say "screw BGE" and buy my power from somebody else.

Re:Good overall, however I question "cost-based"

[chemicaldave]

Buried somewhere in the case documents is a definition of "cost-based". I don't feel like digging around for it right now.

Re:Good overall, however I question "cost-based"

[Skarecrow77]

"cost" does not include overhead, but may include network load, not sure.

My mother was actually in the telco business back in the 90s and early 2000s, working for Verizon selling T3s, OC-3s, OC-12s, etc. She was forced to compete against other companies reselling Verizon's own hardware/infrastructure cheaper than Verizon could because Verizon had more overhead as a larger company.

So at which point you say "hell yeah. fuck verizon. that's what they get for being a big monolithic company, screw the man!" until you realize that these competitors wouldn't exist without "the man" because the infrastructure they're renting wouldn't exist or be maintained.

In true slashdot style, here is your car analogy. You've got a huge ass used car dealership. they're so huge that they've put all the competition out of business. no other used car lots around. The government says "that's not fair, there is now no competition" and mandates that the car lot now allow other outside car salesmen to walk on to their lot and sell their cars. The outside salesmen can sell the cars for lower than the lot salesmen because the lot salesmen need to bump up their prices to account for property taxes, keeping auction-goers on staff (where do you think those cars come from), electricity, etc. etc.

I understand the problem of monopoly, but you have to admit that the above situation is probably not something that the founders of "Capitalism" ever dreamed of. It sounds like capitalism-on-life-support. I really wonder how long such situations can exist before they collapse in on themselves.

Re:Good overall, however I question "cost-based"

[mooingyak]

They'll find other ways to screw you. If your service is interrupted and you're using Verizon lines but aren't a Verizon customer, your work order goes to the bottom of the pile. If the pile isn't large, they'll still leave some cushion room in case a flood of calls come in from their own customers. And they won't move you up when that flood doesn't arrive.

Re:Good overall, however I question "cost-based"

[bmo]

>She was forced to compete against other companies reselling Verizon's own hardware/infrastructure cheaper than Verizon could because Verizon had more overhead as a larger company.

I smell loads of bullshit here, since during the 90s Verizon grew huge, and continued to grow through the next 10 years, and still, even now, continues to grow and rake in money hand-over-fist.

Poor Verizon.

--
BMO

Re:Good overall, however I question "cost-based"

[afidel]

Verizon was handed an infrastructure paid for by years of taxes and government granted monopolies, if they can't make a profit with that kind of setup then they deserve to lose.

Re:Good overall, however I question "cost-based"

[Anonymous Coward]

Well. I'd have more sympathy for your used car salesmen if they didn't get giant-ass cheques from the government to build most of their car lot.

Re:Good overall, however I question "cost-based"

[Skarecrow77]

OP asked a question, I answered it. If you don't believe it, that's your prerogative, but as yourself a question.

If you're a business, a REAL business, and you have had a contract with another company to provide a service to you, what incentive would be needed for you to switch your business to another company? Basically shitty service or price. If you then find out that the service will be identical no matter which company you go with because -they are both using the exact same hardware and infrastructure-, that pretty much leaves price. Therefore the only reason for a company to switch away from verizon to a different provider (once again providing the same lines!) would be price.

Do my statements look silly now?

Re:Good overall, however I question "cost-based"

[PopeRatzo]

My mother ...

I'm sorry your mother had to work so hard to sell T3s, OC-3s, OC-12s, etc in the late 90's and early 2000's.

But I still say, "hell yeah. fuck verizon. that's what they get for being a big monolithic company, screw the man!"

Re:Good overall, however I question "cost-based"

[TaoPhoenix]

It balances out in the "risk-costs" the little guys face when daring to take on the oligarchic companies.

The big telcos have been making too many deals on the whole anti-NetNeutrality game, so those become "unbooked costs" which the seeming-unfairness of the SC ruling is designed to counteract.

Re:Good overall, however I question "cost-based"

[eyrieowl]

Presumably they are not obligated to do upgrades; however, I would imagine that if they choose to do so that they can build that into the "cost based rate", just so long as the cost is amortized across all the customers, not just the 3rd party's customers.

Re:Good overall, however I question "cost-based"

[FictionPimp]

Except all those cars are bought with tax payer money.

Re:Good overall, however I question "cost-based"

[postbigbang]

Undoubtedly telcos will screw you, it's part of the definition. But now, SCOTUS reaffirms that the common carrier clause is in effect, and that telcos are still utilities in the old concept of the word, that their wires are to be used for other providers, and those providers can be awesome or worse than the evil that describes the telcos.

It is a good day.

Could a telco screw a third-party? Sure. But I don't think they'll want to. Why? More than likely, what affects one of the third party customers also affects one of theirs. Secondly, most of the states have highly evolved utility regulatory authorities, some of which aren't in the back pockets of the telcos and will gnaw at their legs until they bleed. Gladly.

Re:Good overall, however I question "cost-based"

[Anonymous Coward]

Yes, they do look silly.

A business has more interest than just the hardware and infrastructure. They is also support, customer service, national availability, etc... There are many ways in which Verizon could remain the better option for a company to pick, they just don't get to be the only option.

If your analysis was correct, Verizon wouldn't be able to compete and would be losing massive amounts of money and be fighting for survival. Seeing as the are instead making huge profits, something pretty much has to be wrong with your arguments.

Re:Good overall, however I question "cost-based"

[cavreader]

On the other hand you don't want to start punishing success. Forcing companies to share infrastructure that they paid for with potential competitors lowers the cost of entry into the market and can increase the number of competitors. These types of questions should be industry specific and not global in nature. You don't want companies sitting back and letting another company absorb the costs in building infrastructure and then demand to use it. The communication industry went through the same process with long distance telephone services and that industry survived and prospered. AT&T might have been a little peeved at the time but they were able to eventually re-group.

Re:Good overall, however I question "cost-based"

[YooHoo2U2]

You are ignoring the fact that Verizon still makes money off the resellers by selling them time on their network. Being required to provide access at cost does not mean they have to provide traffic at cost. To belabor your car salesman analogy, the outside salesmen would still be buying the cars from the original dealer at wholesale rates, not at the original dealer's cost. The dealer is still making money. It might suck for the dealer's retail salesmen, but don't cry for the dealer.

Re:Good overall, however I question "cost-based"

[Grizzley9]

So would setting up a fake .inc and requiring them to give it to me (my only customer) at cost be cheaper than paying my $50/month ISP bill?

Re:Good overall, however I question "cost-based"

[Migraineman]

Don't forget to include the part about the car dealership being able to park their cars on private property anywhere in the county - the first 10-12 feet of "right of way" along the road doesn't really belong to you any more, though you're obligated to pay taxes for it and to maintain it. In my parents' community, the local cable company was granted eminent domain by the city government to run buried cable services *anywhere* on private property, at the cable company's discretion (i.e. to cost-shift installation expenses onto the private land owner with no compensation.) So there's a five foot strip of land across their back yard they're prohibited from using (no fences, no outbuildings, no digging) because of the cable install. The city treats it like a municipal utility, when in fact it is *very* not.

Re:Good overall, however I question "cost-based"

[Penguinisto]

Just one bit that keeps getting left out...

That cheaper company has to pay overhead as well - that includes the price they pay Verizon for renting the b/w and gear.

If their personnel overhead is smaller than Verizon's (esp. since Verizon would have an economy of scale advantage of sorts), then perhaps the problem lies with Verizon's internal business practices.

Also, service is more than just making sure the lines are up: It also includes billing, timely response to requests for bandwidth upgrade (or downgrade), timely response to troubleshooting calls, etc.

Re:Good overall, however I question "cost-based"

[Kamiza Ikioi]

She was forced to compete against other companies reselling Verizon's own hardware/infrastructure cheaper than Verizon could because Verizon had more overhead as a larger company.

The problem with this argument is that overhead tends to shrink as companies grow in size as a percentage of net income. This is why Walmart has cheaper prices than Joe's General Store. Walmart's overhead, as a percentage, is far lower than Joe's.

To say that Verizon has more overhead than third parties is completely misleading. Third party overhead, as a percentage, was far more expensive on a per-service basis. True, Verizon may have had higher percentage overhead on advertising, but that is also part of their ability to out-compete a third party, even if a third party is at a lower cost. Verizon also has a much more well staffed service center. But this is a completely different "service" they can offer, but a third party could not. If a third party tried to compete with a support service center, their percentage of overhead would have been outrageously higher than Verizon.

Verizon nor AT&T are not "screwed" by selling their lines at cost any more than Walmart is screwed by Joe for selling the exact same products. Joe's overhead, as a percentage, and confined to "services" he offers is costlier. And second, Walmart can offer more "services" (more lanes, more selection, more locations, etc) than Joe ever could, and should Joe try to compete in those services, his costs will be a higher percentage than Walmart.

This makes complete economic sense, where-as your post does not. Because, if you were right, it would make no sense for Verizon or AT&T to want to purchase other providers or grow in any way. If it is more economically burdening to grow, then they would fight tooth and nail not to grow. Walmart and Costco wouldn't exist, nor would national brands. In fact, even the general store probably wouldn't exist in such a system.

But that's simply not how the economics work. While your libertarian leaning ideals may be well placed, your economic reasoning for them falls apart. Because, in fact, as a percentage, Verizon can sell its own services cheaper than a third party (at cost), because nowhere in the equation are they getting a free ride.

Re:Good overall, however I question "cost-based"

[bmo]

>Do my statements look silly now?

It is generally accepted by everyone that economies of scale translate into less overhead (less administration per 1000 workers, etc). Smaller companies have higher relative overhead.

This is the argument given /every single time/ for mergers and acquisitions.

If Verizon's relative overhead is larger than that of smaller companines, it's a sure sign that Verizon's overhead is bloated.

So yes, your arguments are silly from any sane economic perspective.

--
BMO

Re:Good overall, however I question "cost-based"

[afidel]

That's the point *they* didn't pay for it, WE did.

Re:Good overall, however I question "cost-based"

[zeroshade]

The actual hardware/infrastructure service is not the only service that counts. Customer service, technical assistance, troubleshooting, are all things that are taken into account. Verizon could still offer a better deal at it's higher price, but being forced to share it's infrastructure at cost means that there will be incentive for the cost of services to go down. Either way, I fail to see the issue.

Re:Good overall, however I question "cost-based"

[Anonymous Coward]

Damn Straight! This means I will finally be able to get service other than ATT in my neck of the woods.

Re:Good overall, however I question "cost-based"

[Omestes]

You've got a huge ass used car dealership. they're so huge that they've put all the competition out of business. no other used car lots around. The government says "that's not fair, there is now no competition" and mandates that the car lot now allow other outside car salesmen to walk on to their lot and sell their cars. The outside salesmen can sell the cars for lower than the lot salesmen because the lot salesmen need to bump up their prices to account for property taxes, keeping auction-goers on staff (where do you think those cars come from), electricity, etc. etc.

Except the city mandated originally that there can only be one car dealership within city limits, and then fronted a huge share of the cost, and some of the property to the owner of the mandated singular dealership. Said dealership for years, then, only sold older model cars at a huge markup because of the mandated lack of competition, and eventually got so arrogant to sell beat-up, non-running, cars as new models without having to tell the customer (where else can the customer go?).

Eventually someone realized that this wasn't good for the customers at all, and mandated that the monolithic monopoly lot had to rent out some of its space for competition for the sake of the customers. The other want-to-be dealers can't open their own lots because of the huge cost (the monolithic monopoly has all of the available real-estate for dealerships, and the cost of opening a new one is impossible to front).

This situation is MORE anti-capitalist than the alternative of forcing giant dealers to open their lots at cost. The state granted (both artificial and naturally bounded) monopoly is far more harmful than forcing monopolies to open up. This situation is also why we have some of the worst internet of the developed world.

I'm pissy because I realized I'm paying Cox for 15 megabits, and getting, on average, 6, which lately has been actually 3 (rendering Netflix unusable). Yes, it is "up to 15", but in turth I've never seen it even hit 10. And we can't switch to the only competition (Qwest) since they have burned us before when we lived in an apartment that only allowed Qwest (we were paying for 5mbits, and got 157kps, with around 50% downtime.)

Re:Good overall, however I question "cost-based"

[AshtangiMan]

Your analogy is flawed in that the outside salesmen in reality are charged for the part of the overhead that covers the infrastructure. What they are able to sidestep is the corporate bloat. I started a company years ago based on the business model that kept the multiple at or below 2. So if the employee makes $50/hr, the billing rate is $100/hr. The industry standard was closer to 3. Here's the kicker, we also had great benefits, so perhaps 40-50% of the multiple was fringe, the corporate bloat was kept to a minimum. We were very successful because we could pay people more, and charge clients less, while providing better services than our competitors (obviously we were able to cherry pick the talent). The current ruling is reinforcing the idea that the market (and by that I mean the end user level buyer) should have the ability to influence correction by choosing smaller and therefore cheaper companies. If you as a business man see an opportunity to start a lean company to compete with a big telco, it means that you can do it, you are charged for the base cost of infrastructure, but you can set up the business to stay lean by limiting what the purely executive "head" of the company can make. It encourages small companies to form business models that don't require growth for profitability, which is analogous to limiting greed.

Re:Good overall, however I question "cost-based"

[Tailhook]

hell yeah. fuck verizon

Fuck you and your straw man.

The network will exist and function well regardless of the fate of Verizon et al. because there are vast numbers of rate payers that will pay for service. It just may not be capable of floating a powerful, vertically integrated company and its army of lobbyists and Hollywood power brokers.. It would, instead, exist among smaller, less powerful and more focused organizations that make their money by competing for rate payers, rather than exclusive media contracts, collusion and tax manipulation.

Our nation has been through this multiple times now. Eventually you get monopolies. Whether though well intentioned public policy or lawful aggregation in the market, you end up with huge beasts haunting the halls of power for their own benefit, if not survival.

You break them up. You define geographic or market boundaries and you slice them up. The natural boundaries for network operators are geography AND product; there is no need or benefit to a vertically integrated COMCASTDISNEYBELLSOUTHTIMEWARNERUNIVERSALAT&T monster. Let the content producers make content and the network operators sell bits. Common carrier.

Obvious, simple and correct. Politically feasible? Not with numpties like you walking around.

Re:Good overall, however I question "cost-based"

[hawguy]

So at which point you say "hell yeah. fuck verizon. that's what they get for being a big monolithic company, screw the man!" until you realize that these competitors wouldn't exist without "the man" because the infrastructure they're renting wouldn't exist or be maintained.

So without large, monolithic telcos, there'd be no telephone system?

I think it's more likely that without large telcos, there'd be a set of smaller telcos, so someone wishing to resell services would have to negotiate with multiple companies. I don't know if that would result in higher or lower prices to the end-user, since economies of scale factor in, but so does efficiency/overhead of a large company. My small credit union gives me much better service at lower rates than my former large bank, but they don't have thousands of miles of wiring to maintain. There must be some happy medium where a smaller telco can provide good service at lower rates than a large monolithic company.

In any case, I don't think it's true that there'd be no telephone infrastructure without Verizon, so it doesn't seem that a company should thank Verizon merely for existing.

Re:Good overall, however I question "cost-based"

[cavreader]

Not entirely. The government does have the responsibilty to help subsidize some industries without necessarily becoming operationally involved. The government subsidizes industries for various reasons which includes making sure the country benefits from possible employeement opportunities and to ensure competitiveness with non-US based actors. However, this practice should be audited regulary to make sure the subsidies are still required. The oil company subsidies come immediately to mind. If there is one industry on the planet that is more than capable of funding itself it is the oil companies. It is insane that these companies come to Washington with their hands out proclaiming their inability to survive without help. The recent congressional hearings with the CEOS of the 5 largest oil companies is a national disgrace. The congressmen participating in that farce should be publicly ridiculed and removed from any position of power and prevented from running for any office in the future. You could not find a clearer example of politicians shamelessly working for the benefit of the companies instead of the people they were elected to represent.

Re:Good overall, however I question "cost-based"

[Anonymous Coward]

Full disclosure: I work for a major telco, but want to keep my job, so I'm posting AC.

If your service is interrupted and you're using Verizon lines but aren't a Verizon customer, your work order goes to the bottom of the pile. If the pile isn't large, they'll still leave some cushion room in case a flood of calls come in from their own customers. And they won't move you up when that flood doesn't arrive.

This is incorrect.

How a trouble ticket is handled depends entirely upon how the customer opened the ticket. It also depends on what level of service they requested at the outset, and how often they call to escalate the ticket.

If your circuit is taking errors every couple of hours, but you call it in as down hard? We're going to resolve the ticket as "No Trouble Found", because the automated testing will have completed faster than the problem could be found. This can also happen if the circuit is taking enough errors to take it down for you, but not enough to impede the automated testing to the CPE.

And of course, if you call in a ticket as taking massive errors, or even better, down hard, but then don't give us test release?

Then yes. Your ticket will get degraded to a pri-2, put on customer time and go into the holding bucket until you call in with a test release. To be fair, if the circuit is actually dead, most of the techs will ignore the "do not test" and test anyway to find the source of the trouble.

So opening a ticket with the correct trouble description, giving us test release, and providing us with access hours, local contacts and phone numbers will go a very, very, VERY long way to getting your service restored. (God, I wish I had a penny for every time I had to waste 30 minutes to track down a local contact. I'd be rich as Croesus.)

Also, bear in mind, yours isn't the only circuit in the world. We've got LOTS of other circuits that are down, and they all need our attention. And as with anything in this world, squeaky wheels get greased faster than quiet ones. This is why we have escalations. If you are diligent and call in every hour to escalate your ticket, I promise you, it WILL get seen to. In the case of DS3 or above circuits, that usually happens pretty fast already, because DS3s can carry 28 T1 circuits, or a mix of T1 and DS0 circuits. That means a dead DS3 can have 28 or MORE very angry customers.

Trust me. We try to move on those as fast as possible.

Higher than DS3 means either one of the Tellabs or Alcatels shit the bed, and believe me, they do it a lot. Or worse, we've got a fibercut out there somewhere. Now we're talking hundreds of customers, all with tickets, all escalating, all pissed off.

Of course, this all depends on where the circuit goes. Just because you bought it through us, doesn't mean it follows our lines all the way to your building. It probably goes through a local exchange carrier, or LEC. If that happens, now WE are at the mercy of the LEC, and all we can do is the same thing YOU do, and keep escalating. And if you thought hold times were bad when YOU call in for an update, hold times for us means putting the phone on speaker for at least half an hour or more. *cough*att*COUGH*frntier*

If you're an ISP, then chances are very good that you'll be supplying service to local emergency services. Police, fire, EMS or state government, even federal government. If that's the case, then those circuits will have a Telecommunications Service Priority, or TSP code. This translates to "Fix Me First!". TSP circuits over-ride all others. A LEC must dispatch on a TSP, regardless of overtime concerns or union regulations. The only thing that trumps TSP is safety, and calling a halt to repairs because of safety will mean an investigation later on, so it'd better be genuine.

TSP is also hereditary. If your piddly little DS0 has a TSP-2 rating, then the shared T1, and that shared T1's DS3 also carry the TSP-2 rating. We see this a lot with railroa

Re:Good overall, however I question "cost-based"

[s73v3r]

First, you assume that we actually give a shit about "Capitalism." Second,

because the lot salesmen need to bump up their prices to account for property taxes, keeping auction-goers on staff (where do you think those cars come from), electricity, etc. etc.

These should all be reflected in the "cost" charged to the other salesmen.

And I highly doubt they had to compete with other companies selling Verizon's stuff cheaper. My guess is that Verizon was charging too much to begin with, and when they got hit with competitors that could undercut them on cost, they refused to lower their prices to compete.

Re:Good overall, however I question "cost-based"

[s73v3r]

Yes, they still do. Because Verizon should either be charging enough on cost to those other ISPs to where they can still maintain the lines, or they should be lowering their prices to continue to compete.

Re:Good overall, however I question "cost-based"

[mooingyak]

First, let me say, exceptionally informative, thank you.

Now, what happens at the install phase, I can't say. If there were a place for shenanigans to happen, that would be it? But more often than not, any shenanigans are self-inflicted by the customer not giving us the information or physical access we need to do the work.

I had been speaking from personal experience, specifically at the install phase (Non local telco told me that install would occur in 6-8 weeks. I was advised to sign up with the local telco, then switch to my preferred telco after the install). I assumed that this sort of behavior would extend to any required work on my line, but I never had to call anything in before I moved, so I can't dispute what you've said.

Re:Good overall, however I question "cost-based"

[Rakarra]

My mother was actually in the telco business back in the 90s and early 2000s, working for Verizon selling T3s, OC-3s, OC-12s, etc. She was forced to compete against other companies reselling Verizon's own hardware/infrastructure cheaper than Verizon could because Verizon had more overhead as a larger company.

No offense intended, but I question your mother's evaluation of the situation. One of the perks of being a larger business is that their overhead is often less (per person, not overall) partially due to the economies of scale that they can leverage. If their costs per unit go up the more units they process, then that's not a sign of a well-managed business.

Re:Good overall, however I question "cost-based"

[hibiki_r]

This holds true in a simple company that sells one product, or a few unrelated products. A large conglomerate like a modern telco is quite different though.

Take, say, AT&T and internet access using fiber. If all they did was sell consumers the bandwidth, they could beat what any reseller would do, no questions. However, they don't just sell connections: They try to sell cable TV over fiber. Broadband internet access competes with TV directly. Make the connection too good, and a competitor that sells just internet TV will make AT&T's TV service a loser. Heck, I know quite a few people that would abandon Cable TV if our good friends at HBO and Showtime supported individual subscriptions over internet. Offering too good an internet service too cheaply, is something the company as a whole can't afford, even if it would maximize their fiber internet sales: They make more money by offering a higher price.

Allowing someone that offers no TV services to reuse the same line at cost would make those that only want internet access have better prices, either by making AT&T have to match the competition in internet only prices, or by having a competitor who has no interest in selling bundles really offer their best possible price on the single product they sell.

Stop competition, and nothing stops this large providers to overcharge one service to make a bundle look more appealing.

Re:Good overall, however I question "cost-based"

[pixelpusher220]

then perhaps the problem lies with Verizon's internal business practices.

Completely agree. What the OP was saying though was that if you follow that to it's extreme, Verizon goes under because they can't provide service as effectively. When Verizon goes dark, so do the people on their lines regardless of the 'quality' they offer.

Just another example why the network needs to be a utility rather than government issued 'franchise'. A system where one company provides both the network and service on the network is inherently going to have conflicts of interest.

Re:Good overall, however I question "cost-based"

[pixelpusher220]

I'm not sure this is entirely the case. They were granted a monopoly in exchange for building the network. That doesn't say either way whether tax dollars paid for the infrastructure or not. Perhaps we did pay for it, but if we paid it, it's a piss poor contract that has us pay for it then gives them monopoly over it ;-)

Re:Good overall, however I question "cost-based"

[Anonymous Coward]

This is what happened when I got a choice in telephone companies in Texas years ago. SWBT owned the lines, but I had Sprint. I switched to MCI. SWBT came out and disconnected my phone and left a note on my door saying they could not complete the order because they didn't have the correct/complete address on the order.

How did they know which door to leave the note on if they didn't have the correct address? I was home at the time. They didn't even bother knocking.

I called all 3 companies.

SWBT: We can't help you, you're not our customer.
Sprint: We can't help you, you're not our customer anymore
MCI: We can't help you, you're not our customer yet.

Several days and many frustrating phone calls later (on my cell phone) my landline service was finally restored.

Re:Good overall, however I question "cost-based"

[thegarbz]

This is normal.

Here in Australia when I signed up with TPG in a new house and wanted TPG to come in and connect my phone line so I could hook my phone and ADSL service up they actually told me to sign up with Telstra (the monopolist who owns the lines), and then immediately transfer the service to TPG. They said turnaround time for signing up with Telstra was 1-2 weeks, turnaround time for signing with TPG was 4-5 weeks as they need to get Telstra to do the line work.

That said lines rarely actually break, what is most likely to happen is a network problem, or an issue in the DSLAM or something, and that is then the owner of the network's responsibility not the owner of the copper. Turnaround time for problems in our system is quite fast.

Re:Good overall, however I question "cost-based"

[Savantissimo]

Where the shenanigans happen is in the tariffs and in procurement. The rates for data lines do not drop after the line and the equipment have been paid off, nor do they fall along with the cost of the equipment, nor the actual costs of maintenance. Theoretically the state PUCs keep an eye on this, but in effect the ILECs charge whatever they feel like. Often the actual costs to the ILEC will be exactly the same for services that span one or even two orders of magnitude of price for the customer -the only difference between a 256M DSL and an 8M DSL is a few automatically set configuration entries in the DSLAM. The volume breakpoints for discounts on lines are set so that the ILECs ISP subsidiary is the only one who gets the really low rates. Similar but more obscure things happen with interdepartmental accounting for costs. An external customer will have to pay for every little thing, internal or affiliated customers don't. The tariffs are also set up to be as opaque and difficult to use as possible, thus deterring service requests for products the ILEC does not want to sell. Then the ILEC-written tariffs are gestured at as if they were law by the ILEC employees, but are virtually never read and often twisted to mean whatever is convenient. For instance "best-effort service" is typically taken to mean "we'll fix at it, maybe"

Procurement is another way of ripping off the customer - the ILEC overpays certain vendors, ones in which it either has a financial stake, (e.g. Western Electric) or, one suspects, ones which pay kickbacks in one form or another (perhaps Alcatel, Lucent). The ILEC can then say that DSL costs $1000/ per port or whatever, despite the true cost being much less. Together with treating the outside plant that has already been paid for three times over and fully depreciated on its taxes as being worth the same rent as when it was new, the ILEC can exploit its customers and push any competitors out of business. Repair metrics get twisted to be the number of calls or dispatches handled rather than whether issues were resolved to the customer's satisfaction, then the number of calls handled is increased by setting things up so that things take several calls to some third-world country to fix, if they get fixed at all. Then just to make things clear about ILEC priorities and the falsehood of their expense claims, field techs are given grossly inadequate test gear, when the appropriate equipment would only cost a week or two of the technician's customer billings (but they can bill more when things take longer, and bill more often if things never get fixed properly) .

Re:Good overall, however I question "cost-based"

[Savantissimo]

I doubt your mom had any idea what it cost Verizon to actually provide the lines (it's a very fuzzy number, if you asked different accountants they could come up with virtually any number you wanted), likely all she had were the tariffs which are basically the equivalent of the sticker price on a car. Obviously the competitors were getting the lines much cheaper than the list price, and higher-ups at Verizon were either willingly selling them at that price or were unable to document higher costs to the regulators, even though ILECs inflate those cost claims to the limits of the abilities of their accountants.

Re:Good overall, however I question "cost-based"

[Savantissimo]

Beyond the government subsidies, the direct taxes to consumers, and letting the ILECs charge essentially whatever they wanted, the most important corrupt crony advantage the ILECs got was that they were granted a monopoly on essential services,a whole sector of the economy, and they got private title to all the publicly financed plant and equipment (which their captive subsidiaries made and marked up to ridiculous levels to launder the ILECs real profits).

Cable too please!

[Zaphod-AVA]

Enable competition and break the local monopolies of the cable companies. Expand this to include cable providers!

Re:Cable too please!

[gtvr]

My thought on local cable was that you should do a bit like electricity deregulation - have one company that runs the fiber to the house, which requires the massive money investment. They lease out usage to TV, internet or whoever at regulated rates. Have wide open competition for content providers - what you want, you pay for, and nothing else.

Re:Cable too please!

[Anonymous Coward]

Yes, but that would be... shudder .... a free market!

We can't have that, it's communiste. err

I'll leave now...

Re:Cable too please!

[chemicaldave]

Isn't satellite available almost everywhere, thereby making a cable monopoly impossible?

Re:Cable too please!

[jgagnon]

Which "large company" would run the lines? Chances are it would be a large company already tied into that industry, thus creating the mess we have now. This whole idea would only work if ownership of the lines that are run is transferred to an independent entity not tied to the commercial success of any of the companies actually using the lines. Obviously, this owner would be responsible for the cost of maintaining the lines. Choose carefully. ;)

Re:Cable too please!

[WhirlwindMonk]

...regulated rates...

...free market...

That term...I don't think it means what you think it means. To be fair, though, it would be better than what we have now.

Re:Cable too please!

[krobe]

Unless you live some place that has trees, as I do. I don't have a view of the southern sky therefore no satellite TV, so I am currently stuck with Comcast if i want to watch sports, or avoid some of the other downsides of going to internet TV.

Re:Cable too please!

[cpu6502]

>>>have one company that runs the fiber to the house,

Government. They already own the roads... and the water/sewer pipes... might as well own the 50-fiber optic bundle too. Then lease one fiber to each company as needed, so customers can choose comcast or cox or cablevision or verizon or AppleTV or MSN or whatever.

Of course this will never happen, because Comcast bribes my local politicians to make sure comcast has an exclusive contract to distribute CATV. (sigh)

Re:Cable too please!

[VGPowerlord]

...regulated rates...

...free market...

That term...I don't think it means what you think it means. To be fair, though, it would be better than what we have now.

Yes it does. regulating the infrastructure side would make the service provider side a free market.

At the moment, the infrastructure and service provider are the same entity, and since they (ab)use this monopoly position...

Re:Cable too please!

[Anonymous Coward]

Only in the areas where satellite is actually competitive with Cable in service, which, as far as I know, there isn't any.
In most areas where you have access to both, the satellite is slower and with higher latency for either the same price or more expensive.

Re:Cable too please!

[devious507]

My thought on local cable was that you should do a bit like electricity deregulation - have one company that runs the fiber to the house, which requires the massive money investment. They lease out usage to TV, internet or whoever at regulated rates. Have wide open competition for content providers - what you want, you pay for, and nothing else.

You can't do this with cable, there isn't an individual line that goes from your house all the way back to the cable company, the wire in your house is only "yours" to the pole where it combines with everyone else in your neighborhood. The wire coming to your house is capable of carrying approximately 125 channel slots. Those channel slots can be used in 1 of 4 ways...

1. A single analog channel
2. 2 HD Digital Channels
3. 3 or 4 SD Digital Channels
4. Approximately 30mbit of download capacity for data

You might live in an area where the the cable company has started pretty much requiring set top boxes, whats happened there is they have run out of spectrum, and are beginning to put what were analog channels into digital in order to free up 2 or 3 channel slots for other purposes, High definition or Internet are the big drivers.

Oh sure, you could do a frequency split with a 2nd carrier, but that service would, by necessity, be digital only, and both carriers would have a far sub-standard offering because they've only got 62 channel slots to work with.

Bandwidth on the CATV lines is a limited commodity, and even in small systems it is running out.

One other thought is that you could divide the city up into quadrants, and have a separate provider for each of the 4 quadrants, but the nature of the technology is that any given subscriber can only have 1 choice so if you live in quadrant A, you get provider A.

Of course, allowing a 2nd (or even 3rd) provider to overbuild the system would allow for real competition, 3 wires on the pole means there are 3 providers available, but what company is going to go through that expense when they don't have the city issued monopoly to ensure they can pay for the massive investment they just made?

Re:Cable too please!

[cpu6502]

You can't have a free market in a Natural Monopoly (roads, water, power), although you can get pretty close via deregulation. Such as electricity choice, local phone choice, multiple car manufacturers, et cetera.

Re:Cable too please!

[Anonymous Coward]

Cable is so much more than TV now days and Satellite can't really compete with the other aspects of the business.

Re:Cable too please!

[Anonymous Coward]

I have never understood why cable companies aren't subjected to the same rules as telcos. This is especially important now that digital telephone has come about. In my area, the two types of companies provide the exact same set of services, yet only one is subject to such strict rules and regulations. Doesn't make sense and severely hurts competition on the cable side, obviously.

Re:Cable too please!

[imric]

To comprehend how the free marketeers think about such things, just use a BSD analogy. The market is not free unless it is free to eliminate competition entirely.

Re:Cable too please!

[Anonymous Coward]

yeah, but it isn't useful for internet..

Re:Cable too please!

[houstonbofh]

In Houston, Reliant power totally divested itself of the infrastructure to Centerpoint, who now maintains the power lines. Works well.

Re:Cable too please!

[houstonbofh]

Based on the condition of many of the roads I have seen, I vote no! Just force a divestiture.

Re:Cable too please!

[cpu6502]

Minor corrections:

[180] channel slots [upto 1000 megahertz].
1. A single six megahertz analog channel
2. [5] HD Digital Channels
3. [10] SD Digital Channels
4. Approximately 30 [or 40 Mbit] of download capacity for data

Points 2 and 3 are why cable channels often look pixelated compared to live broadcast. The cable channels squeeze as many channels as possible into each 6 megahertz/40 Mbit wide slot, which means the viewer sees lots of macroblocking and mosquitos in their picture.

Re:Cable too please!

[Zeek40]

What exactly do you mean by de-regulation? Please explain to me how de-regulation would improve a situation with a natural monopoly. Without regulation, electricity and water would cost just barely less than digging your own well or running your own generator due to the massive capital investment necessary to begin providing service.

Re:Cable too please!

[ArhcAngel]

You missed the key term "regulated" meaning the government would determine what they could charge. It would be like they have done with electricity deregulation. I live in Texas and here is how it was done here. The local government mandated monopoly (Houston Lighting & Power) was split into two companies. One became the owner of the infrastructure and was named CenterPoint Energy. The other became the independent seller of electricity to end users Reliant Energy. Reliant Energy must purchase electricity from power brokers and CenterPoint delivers the power to Reliant's customers. CenterPoint charges Reliant a fee for using it's lines. CenterPoint is regulated by ERCOT. Reliant is free to charge the customer whatever it likes but it now must compete with other electricity providers for the privilege. For cable companies it would be like splitting Comcast into two companies. One would own the infrastructure and be regulated and the other would simply sell programming packages and service. I also advocate this model for Telco and Cellular.

Re:Cable too please!

[Anonymous Coward]

High latency and limited upstream bandwidth make satellite an unattractive alternative.

Re:Cable too please!

[alen]

it's not like the law requires phone companies to do this. the law says if the ILEC's want to enter other markets they have to lease their lines

Re:Cable too please!

[camperdave]

You can't have a free market in a Natural Monopoly (roads, water, power), although you can get pretty close via deregulation.

I think you've got that backwards. If you have a natural monopoly, then without regulation it will remain a natural monopoly. That's the essential definition of the term. Government has to add regulations in order to encourage competition and eliminate the monopoly. The moment the situation is de-regulated, it reverts back to a monopoly.

Re:Cable too please!

[devious507]

Good point about the 1000Mhz plant vs. 750Mhz, once you're out of the analog realm you can play with those last 250Mhz, I forgot that.

2HD / 5SD is about where I can start seeing picture degradation, if the big Cable Co's are doubling that, wow, I'm glad I'm not with a big Cable Co :)

I have to agree with the 40mbit too, increasing the modulation density from 64QAM to 256QAM would get you those numbers.

Re:Cable too please!

[Bengie]

I wonder how much it would cost to switch the channels from FDMA to a FDMA+CDMA system. That would allow a ton more bandwidth, but would probably cost a crap ton to implement.

DOCSIS 2/3 both can use CDMA and it adds a lot more bandwidth, which allows many many more customers.

Re:Cable too please!

[Qzukk]

Sure..........If...........you..........don't..........mind..........the..........ping..........times.

Re:Cable too please!

[hedwards]

It's because phone service is considered a vital necessity for things like calling for emergency services. Cable lacking that ability hasn't historically had to deal with that. Plus, during it's early incarnations it was just an antenna on a hillside with wires leading to the houses, basically just expanding the availability of OTA programming to areas that were too far to get it with standard equipment.

Obviously, that was well before they started offering internet service or VoIP.

Re:Cable too please!

[Anonymous Coward]

I used to work in the retail energy market, with Texas as one of the territories covered. The extreme mobility of the TX electricity market means the cost to acquire customers for the retailers is absurdly high. This drives prices up as the various companies fight for customers while trying to maintain some sort of ever-diminishing profit margin. The cost of churn, as well as bad debt, can get to the point where it can sink a retailer.

However, I agree; it really is how a properly competitive market is supposed to work.

Re:Cable too please!

[nschubach]

Have you had trouble with your toilet backing up when it wasn't your fault for shoving too much paper in there? How about getting water when you turn on the faucet? When the "thing" in question lies below the ground in an area not easily accessible by people driving over it with ignorant abandon these things tend to last.

Re:Cable too please!

[Anonymous Coward]

haha, I think not. At least in my area, no less than once every month or 2 there's a story about a surface street being closed due to a busted (usually corroded through) water main or sewer line.

Re:Cable too please!

[Anonymous Coward]

This is exactly what should happen with all of our common utilities including cable and cell-phones I agree. Many might shout that it's anti-american and defeats the point of capitalism, but I say to hell with capitalism if it's gouging us for things most of the rest of the world is able to take for granted due to their incredibly cheap access.

Re:Cable too please!

[chemicaldave]

I'm referring to cable television, not internet.

Re:Cable too please!

[Bengie]

Actually, a single 6mhz channel can give about 4.75gbit of bandwidth if they're using CDMA. Each 6mhz physical channel has 128 virtual channels, each capable of 30mbit(64QAM)/38mbit(256QAM).

Re:Cable too please!

[dgatwood]

Fortunately, glass or plastic fiber doesn't rust, unlike old iron water mains. Of course, newer pipes aren't usually made out of iron, either, but it will take a while for all the old pipe to go away.

Contrast this with a for-profit utility company, in which a gas main exploded, 8 people were killed, and 38 homes were destroyed, all because of a leak that had been reported several times and had never been fixed. Worse, the city emergency officials were not even aware of the pipe's existence, and nobody knew how to turn the gas off, which likely made the damage far worse than it would otherwise have been.

There's only one thing worse than the government running things, and that's a for-profit corporation running things. The government is out to break even. The corporation is out to make a profit for its shareholders and its executives. Guess which one inevitably cuts more corners. Here's a hint: it's not the government. Just saying.

Re:Cable too please!

[zeroshade]

You can't have a free market in a Natural Monopoly (roads, water, power), although you can get pretty close via regulation. Such as electricity choice, local phone choice, multiple car manufacturers, et cetera.

FTFY

Look at the airline industry, deregulation shot prices up through the roofs.

Re:Cable too please!

[Anonymous Coward]

I don't know where you live, but where I live the government doesn't own the water pipes. In total, 73 million Americans get their water form private companies or public-private partnerships.

Re:Cable too please!

[Xtifr]

Based on the condition of many private roads I've seen, and even lived on, I'll take the government "interference", thanks.

Re:Cable too please!

[Hatta]

2. [5] HD Digital Channels ...
4. Approximately 30 [or 40 Mbit] of download capacity for data

So one HD channel takes 6 megabit, or 732KB/s. For a half hour show then, that's 732*60*30/1024/1024=1.2GB.

You're telling me that digital TV engineers can't deliver a half hour of transparently encoded HD video in less than 1.2GB?

Re:Cable too please!

[Jawnn]

In Houston, Reliant power totally divested itself of the infrastructure to Centerpoint, who now maintains the power lines. Works well.

You, sir, are a liar. I live in Houston and I am here to tell you that the maintenance of the physical plant is a joke. A look down any major thoroughfare, at all the sagging lines and way-off-plumb poles, should be evidence enough, but the real test is in the delivery of the juice and at that, Centerpoint fails hard. Quality sucks (dirty and with frequent voltage sags) and availability is less than stellar as well. That Centerpoint is beholden to shareholders is quite obvious. Contrast his with other communities I have lived in, where public utility districts owned and operated the grid. Blackouts are almost unheard of - I could count on one hand the number of outages in the 18 years I lived there, and have two fingers left over. The quality? Surge protectors were practically a waste of money.

So no. It most certainly does not work "well" here.

Re:Cable too please!

[RatherBeAnonymous]

Not in practice. Satellite is impractical in many areas. It requires a clear view to the geostationary satellites. That means that as you go North (in the Northern hemisphere), those satellites get lower and lower on the horizon, making it harder to get a clear view. In Ohio, satellite TV is not an option for many people. It doesn't help that you have about 50-50 shot of getting an installer with a clue. Out of everyone I know who has satellite TV, about half of them either complain about it all the time, or they talk about how Dish Network (or Direct TV) was so unreliable but Direct TV (or Dish Network) is so much better. Well it's not the network, it's the installation. If the installer puts the dish where it's convenient to install, but not necessarily where there is a clear view of a satellite, your signal will be crappy and you will go back to cable. Sure, they could generally find a place on the property for the dish, but then it would not be a flat $99 installation fee. And in some cases the signal is fine, but then your neighbor's tree grows a couple more feet, and suddenly your signal is gone. In my case, I have a spot where I could put a dish on my property, but it is 50 feet from the house. I'm not going to trench my backyard to install a dish. Any other location would involve chopping down my Neighbor's multiple 100 year-old black walnut trees. That is not going to happen. In denser urban areas it's potentially worse because you can't cut down buildings. Also, most rental agreements I have signed forbid you from attaching a dish to the exterior of the house or building.

Re:Cable too please!

[Attila Dimedici]

Generally, city water costs more than digging your own well. Digging your own well is pretty close to a one time investment. The reason for city water services is because in densely populated areas there may not be enough ground water for all of the people living in the area and/or it may be difficult to drill wells that will not be contaminated by sewers (if you aren't providing water, you quite likely aren't providing a sewer system either. If you are going to go to the effort of putting in a city sewer system, you might as well run a city water service at the same time.).

Re:Cable too please!

[Attila Dimedici]

I am unconvinced that Natural Monopolies exist. I know of only one monoply that developed without direct government intervention (Microsoft) and it is not usually considered to be in one of the "Natural Monopoly" industries. The theory of "natural monopoly" has been used as an excuse to create the very monopolies that are giving us the problems we have with Internet service (cable and telephone).

Re:Cable too please!

[cpu6502]

Ooops. I meant 30-to-40 Mbit/sec datarate. That is only 6-to-9 megabits per second per hd program. And yes that's pretty tight. It's about the same datarate as a DVD, but with six times more pixels to stream.

As for CDMA, I don't know if that would work on a noisy cable system. The reason broadcast digital radio and television is limited to ~250 kbit/s and 19 Mbit/s respectively is because of the high noise floor. Cable is no different. Cable is limited to just 30 or 40 Mbit/s using 16VSB or 64QAM, and still tends to break-up due to interference.

Re:Cable too please!

[Anonymous Coward]

The problem I see with cable and cell is that those companies built those networks at their own cost. The wireline telcos did not and receive large subsidies from the government.

What I think would be fair is if the cable company could charge a flat rate to get initial access to a customer - the cost they had to pay to get that connection there. Then charge a monthly maintenance fee for the cable plant (which should be rather small). This would allow anyone serious to enter that market, but not freeload on the cable company which has born the cost do deploy their own network at their own cost.

Re:Cable too please!

[s73v3r]

Actually, it very, very much would be, depending on what market you're talking about. In the infrastructure market, not so much, but then, infrastructure is generally a very poor thing to leave to the "free market", as there can only be so much infrastructure duplicated in a given area. That means natural monopolies. However, if you're talking about the service/content providing market, then it very much would be, as everyone would be competing on a level playing field.

Re:Cable too please!

[Rakarra]

I'm referring to cable television, not internet.

These days it's getting more difficult to separate the two.

Re:Cable too please!

[Bengie]

Actually CDMA is extremely resilient to narrow band noise, much more so than TDMA/FDMA. CDMA was actually created by the military to get around jamming devices.

DOCSIS 2/3 can make use of the 20mhz band only when using CDMA. Because there is so much noise TDMA can't get any signal, yet CDMA works just fine.

Also,because of CDMA's resilience to noise, CDMA mode supports 128QAM on the upstream, while TDMA mode only supports 64QAM upstream.

Speaking about noise, look at cell phones. A GSM(TDMA) tower outputs about 100watts and has a hard range limit of about 35km. GSM phone supports ~400 channels with ~3 TDMA'd devices per channel. GSM has a max of about 1200 users per tower and towers have to be strategically places to avoid overlapping frequencies. The phones have a max output of 1.5watts.

CDMA towers output ~15watts, have a practical range of about 75km+(but no hard cap), and have only one channel shared by all towers and devices. The hard cap on a CDMA tower is about 1trillion users, but because of the processing overhead and limitations of signal quality it's closer to 10,000 users, but there's almost no limit on how many towers you can pack into a given area to increase signal quality. The phones have a max output of 0.2watts. CDMA towers can actually change their user limit based on signal quality. If you have clear weather, the tower may allow 12k users, but it starts to rain, it may drop down to 9k.. etc Those number were pulled out of my... well, you know, but for example. Given a clear enough signal and enough processing power, you could have a single tower handling everyone in the world, but I wouldn't want to be anywhere near it.

In the case of cell towers, CDMA uses ~1/6th the power, has double the range, supports about 5 times the devices, uses 1 channel instead of 400, and is more resilient to noise; compared to TDMA.

CDMA is that good. It just costs a lot more money and uses a lot more processing power.

Best quote I found about CDMA is "[...]not directly subject to the laws of Information Theory". TDMA unfortunately is.

CDMA mode for DOCSIS 3.0 actually allows channel bonding within the virtual channels of CDMA. eg each physical 6mhz channel has 128 CDMA channels. You can bond 4 of those virtual channels together for ~160mbit. It works better to bond over different physical channels though as a given channel could get sudden noise that interferes.

Re:Cable too please!

[Savantissimo]

Nah, Microsoft's monopoly was a government monopoly, too - copyright.

Re:Cable too please!

[houstonbofh]

While you have been living in other communities, I have been living in Houston. I travel a lot, but live in Houston. Out of plumb poles? It is a swamp. Everything moves. Poles have been out of plumb long before Centerpoint took over. Outages? Yep... Other places too. But when Ike came through, how long did it take to bring 5 million people back up? It ain't perfect, but it is as good as it ever was, and cheaper. And you, sir, are a pickle. Wait, just cause I say it, it doesn't make it so?

Detailed Analysis

[Spad]

The ruling was a victory for Talk America Inc. in its fight with AT&T’s Michigan Bell Telephone unit. The case centered on so-called entrance facilities -- the wires or cables that connect the networks of two carriers. AT&T argued unsuccessfully that those lines aren’t covered by the 1996 law.

There, now you've read the entire article

Re:Detailed Analysis

[grub]

TL&DR

Re:Detailed Analysis

[thijsh]

TL

Re:Detailed Analysis

[grub]

T

Re:Detailed Analysis

[thijsh]

l

Re:Detailed Analysis

[Rakarra]

&

9-0?

[geoffrobinson]

If you lose 9-0 at the Supreme Court that means you pretty much had no case.

Re:9-0?

[halfEvilTech]

sudden outbreak of common sense?

and yes I agree with applying this ruling to the cable companies as well.

Re:9-0?

[The1stImmortal]

Not a Yank here, but from what I've been given to understand of SCOTUS - if you don't have a case it simply doesn't get that far?

Re:9-0?

[Zeek40]

Unless you've got enough money to keep pushing, yes. Money == Justice in the US more than any other part of the first world.

Re:9-0?

[Sechr Nibw]

Not necessarily. When dealing with a big player like AT&T, it could just mean you only paid off half the judges getting up to SCOTUS, and forgot to pay off the Justices. Or didn't pay them enough?

Re:9-0?

[geoffrobinson]

"no case" was overstating things. The Supreme Court can refuse to hear the case. They may have decided to take the case because they wanted to make something explicit or because of conflicting lower court rulings.

Other comments regarding money is just cynicism.

Re:9-0?

[hedwards]

SCOTUS doesn't have to take a case, ever, because of the numerous cases that they could hear they get to pick and choose. What probably happened is that they saw the questions involved as being ones that would be important in the future. The article unfortunately fails to mention whether this is affirming a lower court decision on the matter. But, this allowed them to set precedence which would then apply to all federal courts in future disputes.

Re:9-0?

[Sechr Nibw]

Yep, it's cynicism to say that judges can be bought by corporations with buckets of money. Judges are about justice, right? So they have to be impartial to the almighty dollar as well as to the truth.

/sarcasm

What is "at cost"?

[gar_man]

How do you verify "at cost" prices? Is there an independent and/or open audits? These entities have been gifted with regulated monopoly status. History has shown them to be just as aggressively profit driven as many other corporations.

Re:What is "at cost"?

[Anonymous Coward]

It is actually somewhat easy to verify. They have these things called accountants who can tell you how much things cost. They also have these things called audit houses. That can look over the books and find out if you are doing the right thing.

But if your wholesale sell to cost is > than the cost of your service you sell to customers. It is pretty apparent something is wrong.

Re:What is "at cost"?

[Amouth]

but what if they work the books so that the wholesale cost is so high that the margin for the other provider couldn't possibly be profitable?

Re:What is "at cost"?

[locallyunscene]

Both the telecos and regulators already have deal with this setup for phone lines. Remember back in the 90s when Aol and NetZero and all the rest would set you a disk a week to hook up to their service? The tricks are well know to both sides by now. As always it will be a matter of who gets appointed to enforce the regulation.

Re:What is "at cost"?

[hedwards]

Then people start going to prison for fraud and the telecom ends up on the receiving end of a nasty antitrust suit. And possibly loses their status as sole provider of that infrastructure.

Re:What is "at cost"?

[Anonymous Coward]

Oh man, did I reorganize my pay structure to place all personnel salary on the same books as my cost to provide service? Oh darn. I guess I can use this pile of cash coming from third party Joe's Phone Company to pay my employees while I use the profit from my paying customers to expand.

Re:What is "at cost"?

[TheRaven64]

The way this works in the UK is quite simple. BT's wholesale and consumer divisions are separate. Their wholesale division must provide the same products / prices to third parties that they provide to the consumer division. It's pretty easy to tell if these are two high, because then the consumer division won't be making a profit.

Re:What is "at cost"?

[Savantissimo]

The replies you got are ridiculously naive about how ILECs rig their accounting and prices. Audits don't help because the way that the accounting is rigged is actually legal. The "regulated" part of "regulated monopoly" is also pretty much a joke.

Solution: IP streaming

[Anonymous Coward]

Don't use channels, use IP streaming instead.

Re:Solution: IP streaming

[tepples]

Don't use channels, use IP streaming instead.

In other words, switched video. But even if you use IP multicast framing instead of traditional digital cable TV framing, you still have to send any stream that at least one person in a given neighborhood is watching.

Re:Solution: IP streaming

[mikkelm]

You can't not use channels. They're a fact of life in a cable plant. If you take the output of the streamers feeding the broadcast content, throw IP around it, and toss it out a CMTS, then you're creating more overhead and more cost than multiplexing it onto a pure digital CATV channel.

A CMTS fundamentally does pretty much precisely the same thing as a digital CATV node. It just adds a lot of overhead on top of that to provide unicast service.

Holllywood accounting

[Anonymous Coward]

I can see the help wanted ads....

"Experienced accountant, with background in the film industry and/or music industry. Must have proven track record with studios that have shown zero profits despite hit record and/or blockbuster movie. Telecom experience or soul not required. "

Headline vastly overstates the opinion's impact

[Kuma-chang]

As an actual telecom attorney, I'd just like to clarify that this ruling applies very narrowly to the use of entrance facilities (wires running into telco offices) for the purpose of interconnection. The dispute centered on an order from the FCC that excluded these facilities from regulation under one part of the 1996 Telecommunications Act that requires unbundled access to network elements that are necessary for competing service providers and would impair their ability to provide service if they were denied access. A separate section of the Act requires telcos to provide cost-based access to network facilities for the purpose of interconnection. AT&T claimed that the order meant that they did not have to provide access to entrance facilities under either statutory provision. A competing provider, took them to court over it, the FCC filed a brief stating that AT&T was required to provide the facilities for the purpose of interconnection, and the Supreme Court endorsed the FCC view. That's it. This opinion does not expand the rights of competitors to unbundled access to incumbent networks in any general sense.

Re:Headline vastly overstates the opinion's impact

[Unequivocal]

Thanks - great comment. Can you answer the more general question as to what happened to unbundling? I talked with the FCC team who were responsible for the infrastructure work on NBP last year, and they just totally wrote it off -- "Unbundling? Yeah right, it'll destroy the industry if we do that."

What went wrong after 1996? We had unbundling for a few years and now it's totally verboten. Regulatory capture? Anything legal that's taken us down this road? Thanks for any insight.

Re:Headline vastly overstates the opinion's impact

[cdrguru]

I don't know about everywhere, but in Illinois the government-mandated rates were below cost to Ameritech/SBC/AT&T. The result was that after a couple of years Ameritech was able to get the mandated rates recinded and they no longer had to effectively support the competition.

For a while in Illinois you could connect your phone line up to at least 3 or 4 different DSL services. None of them had any investment or incentive to provide any customer service, so you got what you got. A few people got good service, the rest got nothing but headaches. Ameritech could do little as much of the problem was bad copper pairs going to 80-120 year old homes and with getting paid less than it cost to maintain the lines there was no incentive to do hugely expensive upgrades.

This happened because around 1996 the rates were established and left there. In 2001 I know I got a T1 connection with no local loop charge because the fees to Ameritech were so low that it was practical for the company (McLeod) to absorb them. One side effect of this was greater use of fiber vaults in new construction because there was physically no space for competing companies to get for a DSLAM, effectively eliminating competing DSL in those neighborhoods. I believe sometime in 2003 the whole co-location requirements ended because it was simply not practical any longer given the rate situation and other requirements.

With a fiber vault the copper is from the home to the vault and a fiber link from there to the CO. It eliminates most of the copper from the system and puts everything into the digital domain right from the vault. The only problem is there is no space to put in more than a single DSLAM in the vault so it eliminates DSL competition.

Where are we today? I don't know how it is in Phoenix, but the only DSL provider is Qwest. Obviously no co-location requirements here. Based on the experience in Illinois, I can't imagine anyone really wanting things to go back. It was a disaster for everyone concerned, except maybe a few customers (5%?) that got decent service. I don't see how you can go back if your neighborhood is wired to a vault today.

Re:Headline vastly overstates the opinion's impact

[Savantissimo]

In the southeast US, the competing ISPs sold DSL service where everything from the local loop to the ISP connection was provided by the wholesale part of BellSouth. BellSouth's captive ISP was theoretically competing on the same basis as the other ISPs, but the volume clauses for price breaks were adjusted so that only BellSouth's ISP got much lower prices, and there was a huge amount of cooperation between the wholesale side of B.S. and the ostensibly independent ISP. The big pipes at the ISP end were also much cheaper for BellSouth's ISP. From the beginning B.S. had ~95% of the DSL market. I doubt that the situation was too different anywhere in the US - the ILECs all find ways to keep competitors off their lines through cost exaggeration, anti-competitive collusion and discrimination and regulatory capture.

Excellent ruling!

[AngryDeuce]

Does this apply to ISPs? Will we actually see some real competition when it comes to Internet Access? As someone stuck with Charter Communications, I truly hope so.

AT&T will put them out of business anyway

[Anonymous Coward]

All of the old Bell companies operated under those rules in the late 90s and last decade. The company in Tx (can't recall their name this AM) endured $1M/day fines for a long time to put one of the companies that used their last-mile twisted pairs out of business.

I don't expect this to be a lot better.

Who even remembers the name 'covad' any more? They used to be a big name in this business.

Canada has a freer market, but...

[tlhIngan]

Well, it's interesting to note that here in Canada, we have the exact opposite - the big telecommunications companies pretty much have free reign except for some small legal matters.

E.g., the FCC mandates that consumers must have choice in set top boxes, so CableCARD was created. Sure it's iffy, but at least you guys get to have "premium" PVRs like TiVo, Moxi, Windows Media Center, etc fully working with digital cable. Here we have to put up with cableco provided boxes that only work with that cableco. They won't activate any equipment you didn't buy from them even if it's identical.

Point 2 - UBB. The CRTC rule that jacked up DSL rates was changed from (cost+%) to (retail price-%). So if the incumbent sold DSL for $20/month and it cost them $10 to provide, instead of the ISP paying say, $12/month and providing service with the remaining $8 (the way it was), the rules changed so the ISP must pay say $18 (10% off retail) for the line. That's why TekSavvy had to jack up prices.

Hell, the only provider that seemed to have done a decent thing was Shaw by announcing new limits and plans that even include an unlimited service. Probably because they were bleeding customers and feared the government might end up stepping in with regulation. Bell and Rogers though... bleh.

Free market, indeed. Sometimes I wish our CRTC had balls like the FCC.

Re:Canada has a freer market, but...

[sycorob]

Free market, indeed. Sometimes I wish our CRTC had balls like the FCC.

Really? That's pretty much the saddest thing I've ever heard!

Re:Canada has a freer market, but...

[ameoba]

Cablecard is such a joke. At best, the implementation was half-assed and companies only supported it enough to maintain legal compliance.

Why would anyone build new infrastructure now?

[RightSaidFred99]

Does "at cost" include the amortized cost of building up the infrastructure? If not, it would be silly for any large telco to build any new deployments. They would spend millions laying cable, setting up infrastructure, etc.. only to have to let some asshole ISP come in and use it for whatever the ongoing maintenance costs are.

Re:Why would anyone build new infrastructure now?

[SleazyRidr]

I think it's still worth their while to make promises to the government to get subsidies to build infrastructure, even if they now have to follow through on those promises.

Re:Why would anyone build new infrastructure now?

[cdrguru]

In Illinois "at cost" meant that in 1996 the state commission for telephone rates wrote down what could be charged and left it there until it was discontinued in 2003. Whatever that rate was, it had already been decided and locked in.

Obviously there was nothing done that wasn't absolutely necessary. Anything new was done with a fiber vault which had no space for co-located equipment, which got them out of having to provide space.

Re:Why would anyone build new infrastructure now?

[Savantissimo]

The infrastructure is fully depreciated and has already paid for itself several times over. ILECs don't like building out new plant anyway - they have no reason to since they have no competitors worthy of the name, they can't really charge more since their rates are already based on what the market can afford rather than the costs of providing service, and the new service would just cut into the sales or margins of their existing services. If you want the ILECs to compete, then you have to give them competition. If you want them to provide the best service technically possible at the best prices, then you have somehow instill a service culture like that of Korea's providers.

The issue was/is cost

[kenh]

Under the original law, telco equipment was to be rented out at a rate decided by gov't - typically based on fractional cost of equipment purchase, which is only one small part of total cost.

Under the previous ruling, a telco would maintain a Point of Presence, provide redundant connections to the POP, back-up power, etc. and install a DSLAM - a competitor could come in and tell the telco that they wanted a DSLAM port and only pay for the fractional cost of the DSLAM device. The telco had to eat the difference.

This allowed competitors to offer lower cost DSL service, for example.