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Re: What do we mean when we say "competition?"

  • From: Owen DeLong
  • Date: Wed Nov 16 02:01:36 2005

I think what is really represented there is that
because
they own an existing network that was built with
public
subsidy and future entrants have no such access to
public
subsidy to build their own network, ...
Sean's post correctly identified the problem with this
assertion, so I won't

And I provided a response to Sean's email, so, I won't
repeat it here.

The government should recognize that the existing
build
has actually been paid for mostly by public subsidy
anyway
and as such, should require the ILECs to split into
two
separate divisions.
You mean the existing FIBER build was mostly paid by
public subsidy?  Do you have a reference for that?

No... I'm talking about "last-mile" ifrastructure, not
backbone.  I'm much less concerned about the cost of
new backbone _IF_ providers can get fair and equal
access to public right-of-way.

Most places have no fiber "last-mile".  Some do.  Of those
that do, I know that many were installed by cable companies
and that there are in many of those places utility taxes
that are being collected and passed along to at least
partially fund said buildout.  I know that Comcast
signed a huge sweet-heart deal with the city of San Jose,
for example before they started tearing up my neighborhood.
They seem to have laid interduct to the curb and co-ax
to the home.  I haven't seen them bring any fiber anywhere
yet, but, I presume that's what the interduct is for at
some point.

Mostly all they've delivered so far is damage.  4 sepearte
loss-of-phone service incidents (they cut F1 (twice), F2
(once) and the cable in my street (once)).  I'm not a Comcast
subscriber and probably never will be, but, that doesn't
prevent the city from taxing me to support this buildout.

One division would be a
wholesale
only infrastructure delivery company that would
maintain
the physical infrastructure.  As part of this,
ownership
of the physical infrastructure in place would be
transferred to an appropriate local civil body
(city,
county, district, etc.) and said body should have an
initial 5 year contract with the infrastructure
portion
of the ILEC to provide existing services on a
provider-
neutral basis (same price to all ILECs, Clecs,
etc.).

At the end of that 5 year contract, the maintenance
of
the infrastructure should be up for bid, and, if the
existing ILEC infrastructure portion can't win the
bid,
they are out of luck.
I don't know how familiar you are with what the
government contracting process is like, but the word
"unpleasant" comes to mind: it's long, hard, and
cumbersome.  Your model would substantially increase
the amount of government contracting required, so you
would need to be able to show a benefit to society of
corresponding magnitude.

Huh?  I'm talking about doing this once every 5 years
so that the infrastructure management company has to
face some potential recourse if they do a lousy job.
I'm not talking about switching contractors on a monthly
basis or anything like that.  Actually, I think a once
every 5 year contract would be a lot less cumbersome
than the number of PUC applications processed today.
How familiar are you with THAT process?

Right, but, faced with potential competition, they
are
notorious for temporarily lowering prices well below
sustainable levels in order to eliminate said
competition.
Are you alleging that the ILECs/RBOCs are providing
services below cost?  If so, call a regulator.  If
not, while the profits may be lower than desired by
the ILEC/RBOC, it's certainlly "sustainable"

I'm alleging that the ILECs/RBOCs have lower costs than
their competitors because they own an infrastructure
that was paid for, at least in large part, by others.
Further, they have an incentive to provide better service
to themselves than to their competitors and do so.

The '96 telecom act did nothing to take the
last
mile infrastructure out of the hands of the existing
ILEC.
You are correct.  However, the '96 telecom act did
give lots of other companies the OPPORTUNITY to build
their own last mile access.  Your proposal actually
drives toward a more monopolistic, regulated
environment.

Not really.  First, the '96 telecom act did nothing to
remove Cities' ability to enter into exclusive franchise
agreements for public right-of-way.  Second, my proposal
includes the idea of OPEN ACCESS to public right of
way for anyone who wants to build infrastructure and
the elimination of such franchise deals.

So, my intent, at least, is to give equal access to the
existing infrastructure for all comers while simultaneously
making putting new infrastructure in public right-of-way
more accessible to more providers.

That having been said, the reality is that there is no
rational cost-model where it makes sense to put parallel
separate fiber/copper/whatever into every home/business/etc.

The last mile is notoriously the highest cost with the
lowest return.  As such, it lends itself to natural
monopoly regardless of other factors.  Recognizing
this fact and limiting the monopoly to a carrier
independent organization that ends at the MDF on a fair
and open basis to all service providers reduces the
regulated monopoly portion of the network from the
current user<->First intelligent device and
reduces it to MPOE<->MDF.

So Verizon should be prohibited from building out
FTTH?  I assume that your approach of "the Government
owns all layer 1" would also include 802.11, GSM,
CDMA, and all other network types, right?  If not, why
not?

No... Verizon should be allowed to do so with the understanding
that the people retain an option-to-buy said FTTH for a price
set at the time before they begin deployment.

I'm not proposing that the government should own all layer 1.
I do think that the government should have an option to buy
on "last-mile" terrestrial layer 1.  Why?  Because that tends
to be the area where parallel infrastructures provide additional
cost and not additional benefit to the consumer.  Why not in
the case of 802.X, GSM, CDMA, etc... Because those forms of
infrastructure do not suffer from the same types of last-mile
cost models that terrestrial deployments do.  Let's face it,
the really expensive part of most terrestrial infrastructure
deployments is the trenching/moleing(sp?)/pole-stringing
of the stuff between the MDF and the MPOE (or equivalent
terms for other network).

Now, the ILEC can continue to provide
service at the same price, but, they no longer have
a cost-basis advantage or the ability to delay,
defer, interfere with CLEC installs on the same
infrastructure.
Any interference is currently unlawful, and all of the
companies regulated under sections 271 and 272 have
extensive procedures in place to prevent it.  If
you've got specific complaints about a specific
company, you should be talking to a regulator.

Right... But, there's boundary conditions and if you don't
know they push the envelope on those boundary conditions,
you aren't paying attention.

It takes about two weeks to get through the complaint
process.  If your issue is resolved before the PUC
gets to your complaint, the PUC calls your complaint
"moot" and moves on.

An example, I switched at one point from Pacific Bell
Local Service to MCI.  Pacific Bell misplaced the order
from MCI for 4 days after the original FOC.  The day
after I filed my complaint with the PUC, magically they
found the order and it was installed.

When I switched back from Worldcom to SBC (Worldcom
changed their rates and eliminated the part of
their service that made them attractive), SBC
didn't lose my order.

This is just one example.  I have accumulated about
a dozen or so such occurances over the last decade
personally, and, have discussed the specifics of
many more with other people who experienced them.
If anything, SBC (and I suspect other ILECs) are
very good about knowing just how far they can violate
the law without consequences.

To the average consumer (SBC consistently blamed MCI
for SBC losing the order), this just looks like the
CLEC can't get their act together.  I had enough
familiarity with the system to ask the right people
and know where things were happening (for example,
in one case, MCI faxed me the form and I personally
faxed it to the SBC number and retained the
confirmation page).  SBC was shocked when I showed
it to them when they tried to claim MCI must not
have faxed it.

So, to summarize - far less than "all" of the
ILEC/RBOC infrastructure was "paid for with public
funds." (as opposed to user fees), you'd argue for far
greater government participation in the marketplace,
and the removal of any competition for layer 0/1
services, in favor of competition at layers 2 and
higher.  Why is that good again?

True... Far less than all of the ILEC/RBOC infrastructure,
but, far MORE than half of the "last-mile".

No, I don't agree with removal of any competition for layer 0/1,
but, I do believe that most forms of terrestrial layer 0/1
"last mile" form natural monopolies because of cost models.
As such, I think that managing such natural monopolies to

1.	Constrain them to the smallest possible portion of
	the infrastructure.

2.	Ensure fair and equal access to said facilities by
	competing service providers to the greatest
	extent possible.

Is the best we can currently do.

Owen
--
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