The Letter: Room for Another Carrier’s Carrier?

Posted: 2/2002

The Letter

Room for Another
Carrier’s Carrier?

I’m not sure the telecom industry has room for another acronym let alone another carrier’s carrier. But, some industry players and policy gurus are proposing both.
ADCos, or alternate distribution companies, are being hailed as a new breed of carrier’s carrier that will help crack open the local telecom bottleneck.

In her
policy feature, Washington Bureau Chief Kim Sunderland explains ADCos basically wire homes and businesses with broadband pipes for other carriers to use rather than marketing retail services. Proponents of the model quoted in Sunderland’s article say ADCos — by virtue of a wholesale-only strategy — wouldn’t compete with or sabotage their wholesale customers. Instead, ADCos would continue building out their networks in order to reach greater economies of scale and eventually create legitimate rivals to the incumbents.

Such a rival, they reason, is needed for true local market competition and service innovation to occur.

Naysayers argue the last thing we need is more networks for resellers to use for insane price slashing. They also contend these companies will never attract the capital they need in today’s market and instead what’s needed is further investment in alternative last-mile technologies, such as cable, satellite and wireless.

These arguments show the bias toward facilities-based competition remains alive and well. I can see the point, but I also find it difficult to ignore the substantial change in the long distance industry that occurred after switched and switchless resellers entered the picture. Their influence was responsible not only for affordable long distance calling, but also for innovation in services as providers were forced to compete with one another.

So far similar competition has not materialized in the local access markets. There are resellers, but virtually no competitive networks. This puts resellers in the awkward position of relying on their chief competitor as the sole supplier of vital services.

Further, need I remind that long-haul providers routinely use the same networks as their competitors? It’s not feasible, nor necessary for every carrier to have its own global facilities.

Why shouldn’t a similar model work in the last mile? 

Khali Henderson
Editor in Chief

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