IP: local loop competition in Rochester

[David Farber <farber () central cis upenn edu>]

From: Craig Partridge <craig () aland bbn com>
Date: Wed, 04 Oct 95 18:52:41 -0700




[for IP if you think useful]


Hi Dave:


    I attended TPRC this past weekend. TPRC is an annual conference intended
to stimulate interactions between research economists and policy wonks and
policy folks in government.


    On the opening night they had a panel discussion of the Rochester NY
experiment with local loop competition.  I'd not heard of this activity
before and it was very informative.  For the past 9 months, Rochester has
had local loop competition in two forms.  At one level there are two
providers of local loops -- a newly created subsidiary of Rochester Tel
and Time Warner (which is installing a new local loop system).  At another
level, carriers can rent local loops from either facility provider (though
since Time Warner is just getting started, I gather folks are all renting
from Rochester Tel) and offer their services to customers.


    Wonderful war stories were told.  Figuring out how to seamlessly integrate
two physical sets of local loops has apparently not been easy (indeed, we
were told that they thought Time Warner and Rochester had finally gotten it
working in the past week or so).  No one had any idea what to set the
wholesale local loop rental rate at, and they set it too high.  Users
don't want to change phone companies, so Rochester's original plan to
have one subsidary that just rented local loops and another one that
rented loops for its subscribers got muddled by the public services board
and the subsidiary that rents loops to third parties is also the supplier
to users (thus competing for users with the third parties it wholesales to).
They have not yet created an open database of loop information -- so when
you call a new provider, they have to FAX to Rochester to get phone
and installation information and then try to figure out how to get back
to their new subscriber (who presumably doesn't have a phone yet...).


    Perhaps the best story is about AT&T's user base. AT&T is providing local
service to small portion of the Rochester community.  AT&T initially marketted
to a select bit of the community (apparently, prospective high volume
customers).  However, AT&T has since picked up a very large number of
deadbeat customers (nearly 50% of AT&T's customer base).  Apparently what's
going on is when folks have their phone service cutoff by Rochester Tel,
they are now seeking out a new local carrier, and since AT&T has a well known
name, they pick AT&T...  (The joys of a well-known brand name!)


    Other than war stories, a distressing note -- initial indications are
local loop competition will require more regulation, not less -- and
the regulation will be at a much lower, more complex, technical level
(rules for integrating systems, etc).


Craig