TCS Daily

The Speed of False Hopes

By Duane D. Freese - December 13, 2004 12:00 AM

Talk about speedy.

Last month, a competition among physicists produced a 101 gigabit per second data transfer -- a rate that would enable downloads of three DVDs per second or the whole library of Congress in 15 minutes.

Put another way, it's about 1.8 million times faster than your standard 56Kbps dial up and about 67,000 times faster than Verizon's $29.95 digital subscriber line (DSL) download speed -- one movie every 6 hours, if you please.

Which is one reason that some Internet fans, rather than going, "Golly gee" might be excused for responding to the news with a grudging, "So what?"

After all, more than a decade ago, BellAtlantic, Verizon's predecessor, had promised Pennsylvania's legislature that it would deliver high speed broadband at 45 Megabits per second to all the states homes by 2015 in return for rate relief. It got the rate relief, with the state's public utility commission given broad authority to determine the parameters of deployment.

By 2000, though, Verizon began seeking to define broadband downward -- to 1.5 Mbps per year. And in 2003, the state's PUC gave in to it.

Some communities in the state didn't like that and began planning their own broadband networks. And what did Verizon do? It appealed to the legislature to kill such efforts, saying it would undermine its broadband investment.

And what did the Legislature do? It caved, last month signing a bill blocking municipalities outside of Verizon from competing with the Bell monopoly, with Gov. Ed Rendell signing off on the bill Dec. 2.

So, Pennsylvania's consumers will probably pay more to get a system 5 percent as fast as they were promised.

Verizon is not the only Bell to renege on its broadband promises. SBC in the late 1990s unveiled a program called Project Pronto, which it promised would make DSL service available to 77 million Americans by 2002. The FCC approved the Ameritech merger in 1999 partially based on SBC's promise and its vow to open its lines to competitors at reasonable rates. In October 2001, SBC reduced its capital spending by 20 percent and as of this summer had a total of 4.3 million DSL lines. Competition, meanwhile, in the old Ameritech territories remains as sparse as 80 degree temperatures along Lake Michigan in December.

Yet, SBC has more promises to make -- this one Project Lightspeed. It will provide not DSL but fiber to 18 million homes that will enable video on demand and other high-speed telecommunications. What's it need to do that? Only exemption from the local cable franchise rules and right-of-way fees that would require it to supply all homes rather than just high end customers with such video services.

Who doubts that they'll get it?

In the Telecommunications Act of 1996, Congress laid out a course for promoting competition in local telecommunications by letting the Bells into the long-distance business in return for opening up their networks to competitors, including long distance companies, so they could establish a customer base to provide local phone service.

The Bells agreed to the law, and then legally fought the implementation.

Through it all, the seven Bells were allowed to merge into four. They were allowed into long distance. And local competition? They still control 84 percent of the lines. Yet, this week, on Dec. 15, the FCC is expected to implement rules for leasing that the Bells find more favorable.

Gone will be the wholesale leasing by competitors of so-called unbundled network element platform -- UNE-P -- by which most competitors to the Bells were gaining a foothold in the local market. A study for Bell competitors -- called CLECs for Competitive Local Exchange Carriers -- found that if they are denied access to two key components, DS-1 and DS-3 loops and transport serving business customers, costs to business would soar by $130 billion over the next decade and cost the economy 426,000 jobs.

The CompTel/Ascent study asserts that "it is likely that much of the local telephone competition presently serving business customers would evaporate."

The Bells say that's an exaggeration. But then they think competitors holding a 15 percent stake in the local telephone market is vibrant competition.

And they continue to try to bully potential competitors into doing things their way.

In late November, SBC filed a plan called TIP Top -- for True Internet Protocol over the Public Switched Telephone Network. Basically, it amounts to the offer of a costly carrot to a new breed of telephone service -- Voice over Internet Protocol (VoIP) -- that uses the high-speed Internet backbone and packet-switched Internet Protocol to deliver voice service in the same way as data. Because this service doesn't tie up phone lines like regular analog phone service, it can deliver both long distance and local phone service more cheaply, and with a wider array of options.

To get the service, you have to have a broadband connection, DSL or cable, for which you can pay the Verizon's price above or more, plus the charge for the phone service.

VoIP service providers have been paying local phone companies that terminate their calls at rates negotiated to represent those costs, called reciprocal compensation rates, rather than the much higher per minute access charges that long distance companies pay to subsidize universal local phone service.

The FCC's failure to deal with the access charge issue -- all calls should involve reciprocal compensation, not inflated per minute access charges -- has opened the door to SBC's TIP Top blackmail.

It has threatened those VoIP providers that don't pay its higher TIP Top charges will face back access charges -- that could run into the tens of millions of dollars -- if the FCC or courts ever rule the VoIP providers are liable for any access charges in the future.

If it can frighten enough VoIP companies into TIP Top it will then use that as evidence for the commission and courts that they should pay per minute access charges in the future. Those charges would make VoIP too costly for most consumers.

All of which goes to show that there is nothing faster than a Bell breaking its promises or stomping out competition. That's real lightspeed.


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