CLECs May Have No Savior This Time

FRAMINGHAM (04/03/2000) - When people talk about "local telecom competition," they really mean two different things.

In the mid-1990s, federal policymakers thought cable and utility companies would compete with local telcos. But that didn't happen. So attention shifted to competition over phone wires, with pressure to allow telephony-oriented competitive local exchange carriers (CLEC) to rent the same local loops owned by the phone companies. But now cable and utility companies have discovered the Internet and decided to compete after all. As a result, small CLECs fear that policymakers may forget about them. They could be right.

Take the example of mega-Bell SBC Communications Inc.'s controversial digital subscriber line (DSL) program, Project Pronto. SBC plans to push fiber deep into neighborhoods, then locate remote terminals with DSL line cards from Alcatel connected to the final copper loop. The idea is to cut off DSL distance restrictions to reach more homes. So far, so good.

The problem is that this punches a hole in the plans of CLECs, including DSL specialists, which are relying on that copper loop. In order to get access to the more remote customers, CLECs will have to buy their own Alcatel line cards - DSL interoperability is nowhere in SBC's plan - and hope there's room to collocate in SBC's remote terminals.

And SBC officials have made it clear that if there's no room in the remote terminals, that's just too bad. They even told the CLECs that if they're desperate, they could build their own remote terminals.

It gets worse for CLECs targeting business sites and telecommuters. On the back end out of the remote terminal, Pronto employs ATM's rock-bottom, class-of-service, unspecified bit rate. Some analysts say that's no big worry because the Pronto network will be very undersubscribed at first. But some CLECs are very worried about selling to business users with latency-sensitive applications on this network. Besides, Pronto initially will only support asymmetric DSL (ADSL) and won't do voice over DSL. Without those, CLECs figure businesses will hardly see it as a cheap T-1 substitute.

The CLECs are protesting to the Federal Communications Commission, but this time they may not win. FCC policy has swung - along with the market - back to encouraging big companies from different industries to compete with one another. Why do you think the FCC keeps approving SBC's and AT&T's acquisitions? Because both companies have promised the FCC that they will target the same average consumer - SBC with DSL, AT&T with cable modems. The FCC has all but said it's less important if 50 CLECs target just high-end users over a single copper loop.

What galls the CLECs is not that SBC is limiting itself to plain Jane, data-only ADSL - no one expects the Bells to voluntarily cannibalize their T-1s - but that it has set it up so the CLECs can't go beyond basic ADSL, either.

That way SBC's current T-1s are protected from encroachment unless SBC decides to offer symmetrical, high-speed, multiservice DSL itself. Some competition, huh?

Rohde is a senior editor with Network World. He can be reached at drohde@nww.com.

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