THE BELLS ARE ON COURSE to do away with more copper loops than ever, an apparent rush to beat the clock in case the FCC institutes a stringent review process.
CLECs view the retirements as attempts to foil competition; they use the loops to deliver DSL, Ethernet and other services to customers. They also fear the negative impacts on consumers. Without the copper access, they say, they will be forced to sign on for pricey, slower DS0s or DS1s, or lose their customers. Because of that, two groups of CLECs have asked the FCC to impose rules governing the circumstances under which LECs can cut off CLEC access to copper. Since those petitions were filed at the beginning of 2007, retirement notices from AT&T Southeast (the former BellSouth), Qwest Communications International Inc. and Verizon Communications Inc. have skyrocketed.
Mark McGinness says Verizon sent his company, Expedient, a very cryptic letter a few months ago that had executives fearing a copper cutoff. For now, though, Expedient has access to all of the copper loops it uses to provide data center and disaster-recovery services.
Across the country, incumbents are replacing home-run copper the direct connection between the central office and the end user with digital loop carriers and fiber-optic cable. The Bells say these technologies modernize their networks. They also say they should not have to pay to maintain copper as well as fiber. The Bells had not, as of press time, cut off any CLECs. Instead, the nations largest phone companies say they are making the changes in areas with no retail or wholesale customers. There is no reason why incumbent LECs should shoulder the costs associated with maintaining redundant infrastructure, says Qwest in opposition comments to the FCC, echoing its Bell counterparts.
By the end of March, the Bells had issued a total of 141 copper retirement notices, compared to 160 for all of 2006. Verizon was the most active to date, with 98 retirement notices by the end of February. It only had one copper retirement in all of 2006; that was in July. Meanwhile, in 2006, BellSouth racked up 130 notices. By mid-March of this year, it was already at 30. Qwest reached 14 in the same time frame, compared to a total of 29 for 2006. AT&T did not retire any copper in 2006 and had reported no planned retirements at press time. That makes sense, as its U-verse TV initiative relies on hybrid copper/fiber networks and the company reportedly is mulling the use of VDSL technology to deploy Ethernet over copper.
Now all eyes are on the FCC. Reply comments to the CLEC groups petitions were due April 2. The FCC refuses to say when commissioners might take up the matter.
NEFARIOUS OR NOT?
Under current guidelines, the Bells only have to provide CLECs written notice of copper loop retirements within seven-to-nine business days of the planned retirement. If CLECs do not respond by the last day, the retirement takes effect the next. That barely gives CLECs time to switch to Plan B, if there is one, they say.
If the FCC does not institute a formal review process for copper loop retirements, theres no telling when or if the incumbents will do as CLECs fear and force them onto sluggish, more expensive lines. Of course, the Bells pooh-pooh theories that they are trying to knock out competition in a legal, yet back-handed manner. There is nothing nefarious about the practice of retiring facilities that have been replaced by newer, more efficient facilities, write Verizon attorneys in the companys March 1 response to the CLECs petitions.
CLECs dispute that.
Im sure the RBOCs are trying to avoid competition over the copper for the IP telephony, because theyre making an investment in fiber to the home and they would prefer not to have competition from the copper, says Mark McGinness, vice president of business development for Expedient, a Pennsylvania-based data center and disaster-recovery company. It offers Ethernet services with speeds up to 40mbps, something the LECs cant touch, he says. If Expedients copper access gets cut off, the company will have to bond specialaccess T1s. This is an expensive alternative and services will slow dramatically, he says. Essentially, my costs would go up 10- fold, says McGinness. And the irony is, Im still using copper to get to the end user. The only difference is Im being forced, for a portion of that circuit to go through the RBOCs fiber.
In late February, Expedient got a notice from Verizon that it was replacing copper with fiber in one of its remote facilities in Pennsylvania. At first, Expedient executives feared the worst. But, after several phone calls, they learned and received confirmation in writing that the retirement will not affect services. Yet, McGinness says, that doesnt mean theyre not going to send me a notice tomorrow stating that theyre going to remove the home-run copper.
The notices pertain to small towns and rural areas, says Scott Randolph, director of federal regulatory for Verizon. Were not disconnecting any CLEC circuits anywhere, at least at this point, that Im aware of, he says. Its simply a matter of replacing some copper.
Skeptics dont buy the assurances. I think Verizons going to take actions to make sure copper is retired so no one can compete with them over copper, says John Heitmann, a partner in Kelley Drye & Warren LLPs telecommunications practice. Heitmann represents CLECs including XO Communications, one of the carriers providing Ethernet over copper and taking the lead against copper retirement.
Indeed, petitioners are very suspicious about the sudden influx of Bell decommissioning notices. Theyve seen our petitions at the FCC. They know this is a hot item, says Marty Clift, vice president of regulatory affairs for Cavalier Telephone LLC. The quicker they can get some retirements off the books, the better. Copper decommissioning threatens to hurt Cavalier. The company provides triple-play services, including IPTV, over copper in direct competition with Verizons FiOS product. If Cavalier loses direct copper access, prices will soar and technological innovation will suffer, the company claims.
MILES TO GO
So, in the first of many steps toward a rulemaking, two CLEC factions have asked the FCC to officially oversee copper loop retirement, rather than letting Bells announce retirements without any checks and balances. The petitioners include XO Communications, Covad Communications Group Inc., NuVox Communications, Eschelon Telecom, BridgeCom International Inc. and Cavalier Telephone. They want the FCC to require formal notices of retirement and make LECs provide 12 months notice instead of the aforementioned week. They further think the FCC automatically should prohibit loop retirement unless the agency finds the action will not hurt the public interest or competition. BridgeCom went a step beyond that by asking the FCC to require the LECs to sell their copper facilities to CLECs.
Each of the RBOCs invokes the 1996 Telecom Act in opposing the CLECs petitions. They say instituting the proposed review process will discourage their investment in fiber and eliminate incentives for CLECs to build their own broadband facilities, contrary to FCC policy and objectives of the 1996 Act. Further, they say, consumers will benefit from having access to new technologies not possible with copper. AT&T did not respond to repeated interview requests. Qwest issued a written statement to PHONE+: Qwest constantly upgrades its network with newer technology to better serve customers and meet increasing demands. When legacy facilities are no longer in use, they may be retired and removed. This is done to eliminate costs required to maintain unused plant. The companies filing this petition have not demonstrated any impairment from the removal of abandoned facilities, nor any kind of barrier to entry for other providers.
Yet, CLECs and their advocates remain wary of LECs motives and, in response, are rallying. A group organized by Covad has been meeting every other Wednesday to strategize. Competitive carrier association COMPTEL has been educating its members, ensuring that everybody makes consistent arguments, says Earl Comstock, president and CEO. Normally, COMPTEL would file comments with the FCC, but word has it the association might have refrained this time so former COMPTEL counsel Rob McDowell would not be forced to recuse himself from any discussions prior to June 1. McDowell was sworn in as the fifth FCC commissioner on June 1, 2006, and, for a year, must stay out of any proceeding in which COMPTEL might be a party.
Meanwhile, people such as consultant Allan Isfan, who works with LECs and CLECs, are talking with states public utilities commissions to explain how and why copper is being retired, and the implications of such activity. Cavalier executives have been meeting with concerned lawmakers on the Hill. This really affects national policies, says Cavaliers Clift.
CLECs have a lot to do in a short period of time, as some copper retirements take effect in August. We have our work cut out for us, says Heitmann. Weve got to get the FCC to act and weve got to do so soon.
Of Terrorism & Hurricanes
A large part of CLECs argument is that copper is a valuable national resource, especially in times of another 9/11 or Hurricane Katrina. Petitioners say not having line-powered copper networks would disrupt homeland security and public safety communications. Copper conducts electricity. Fiber does not conduct electricity, says Kelley Drye & Warren LLPs John Heitmann.
Verizon, AT&T and Qwest discount those points of view. Any event that would hurt a fiber network also would adversely affect copper lines, they say. Besides, says Verizon, FiOS products come with battery backup in case of a power failure. CLECs, however, point out that consumers are responsible for keeping the batteries charged and replacing them when they die. There is too much risk in relying on people to remember to maintain batteries, they say.
In addition, there is no clear indication how fiber would work with medical alert systems such as those provided by Life Alert, MedScope and Philips. Such services work with copper landlines. Elderly and disabled users wear a pendant that has a button they can press when they fall or otherwise cant get to the phone. The devices use the phone line to call emergency responders. CLECs say the systems eventually would catch up to fiber, but question how soon and at what cost.
AT&T Inc. www.att.com
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