DSL Carriers Seek Free Use of Phone Wires

FRAMINGHAM (04/20/2000) - It looks likely that the cost of setting up DSL circuits will drop thanks to technology known as line sharing.

Digital subscriber line carrier Rhythms NetConnections has cut an interim deal to use US West phone lines for free when Rhythms sets up DSL phone services in any of the 14 states in US West territory.

While that deal is eye-popping, other carriers have agreed to pay US$5.40 per month as the interim price, about one-quarter of the $20 to $25 competitive local exchange carriers (CLEC) pay now to use phone lines owned by regional Bell operating companies.

That is a significant saving on a service that retails for $60 or so per month.

Carriers could pass the savings on to customers. Whether they will is still up in the air because the final cost of line sharing has not been set yet.

Line sharing is the practice of one carrier running high-speed DSL service on a phone line while a second carrier supplies regular phone service on the same line. CLECs argue that because the lines are already in place and DSL doesn't disrupt the phone service, it costs RBOCs nothing to share the line so CLECs should pay nothing.

State regulators around the country are holding hearings to determine what the actual costs are to RBOCs and to set a price in each state that RBOCs are allowed to charge.

Low-cost line sharing should encourage more aggressive DSL deployment because it is a dramatic improvement in the business case for DSL CLECs, says Strategis Group, a network analysis firm in Washington, D.C.

The Rhythms-US West agreement is more symbolic than concrete because, while the companies have agreed to the price, they have not actually agreed to how they will carry out line sharing. Even so, it is a good sign, Strategis says; and there are others.

For example, Bell Atlantic acknowledges in a New York regulatory filing that its actual cost of line sharing is zero, a significant admission, according to Dean Hardt, senior counsel for DSL CLEC Covad Communications.

It will be hard for Bell Atlantic to argue for any fee for something that costs it nothing, Hardt says.

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