IP: Covad response to Joe Weber note and other things

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

Please note I am on the Advisory Board of Covad (as well as ATT and 
COM21) . I claim neutrality :-)

Dave

> Date: Mon, 20 Sep 1999 17:13:38 -0700
> To: farber () cis upenn edu
> From: Dhruv Khanna <dkhanna () covad com>
>
>
> Dave, sorry for the belated response, but here it is:
>
> 1. Fiber to the home has not proved economic. The widespread building of
> hybrid fiber-coax networks to homes has also not to date been pursued
> successfully. For example, SBC cancelled Pacific Bell's foray into this
> business in the San Jose area very shortly after acquiring Pacific Bell
> because of financial losses. This SBC decision had nothing to do with the
> Telecommunications Act and everything to do with economics.
>
> 2. The argument that the Telecommunications Act of 1996, and its
> implementation by federal and state regulators, has adversely affected
> investments in "infrastructure" is wrong. First, in the past 2 years DSL
> CLECs alone have invested almost $1 billion in network infrastructure,
> facilities and operations that change the effective capacity of the
> nation's ordinary copper lines from 128 Kbps to north of 1000 Kbps. In
> addition, these DSL CLEC investments have in turn prompted the RBOCs to
> finally end their ADSL trials and begin actual ADSL investment and
> commercial deployment.
>
> Second, companies that have chosen to build their own fiber, or hybrid
> fiber-coax networks to homes, continue to do so -- for example, AT&T and
> RCN. Nothing stops the ILECs from choosing this path. The fact that the
> ILECs have also chosen to pursue DSL rather than hybrid fiber-coax networks
> says something about the relative economics of the two technologies.
>
> ILECs' ADSL investments mirror prior ILEC responses to competition. Almost
> every ILEC has, in response to competition, replaced analog switches,
> 1A-type switches with 5E class digital switches.
>
> 3. As to the "crazy requirements on the Telcos, including all types of
> cageless collocation, unbundled elements, subloop unbundling, line sharing
> and who knows what else," the simple answers are found in the Telecom Act
> of 1996 itself:
>
> First, CLECs must be afforded parity, or nondiscriminatory access. This
> means, among other things, that CLECs should not be disadvantaged in
> obtaining CO space. Covad was improperly denied space in many COs by
> several RBOCs, including Bell Atlantic. After the FCC ordered cageless
> collocation, the improper ILEC claims of "no space" in COs have virtually
> disappeared. This is an example of the Telcos improperly delaying
> infrastructure investments by ready, able and willing CLECs. Similarly, the
> ILECs provide line sharing and access subloops to themselves for their own
> ADSL services. The law requires the incumbents to afford CLECs parity. When
> the ILECs fail to comply with their legal obligations, the FCC is obliged
> to specifically mandate that the ILECs provide nondiscriminatory access.
>
> Second, it is critical to remember that CLECs pay the ILECs cost plus a
> reasonable profit for every unbundled network element. We pay approximately
> $20/month for a loop in many states.  These loops often reflect idle
> capacity for which CLECs now provide ILECs with revenue. In addition, we
> can, through line sharing, utilize idle capacity over existing loops that
> carry analog voice traffic.  With all of our services, we save the ILECs
> money by offloading data traffic from their voice-designed circuit-switched
> networks to our own data-designed packet-switched networks.
>
> Thus none of the points made by the RBOCs actually hold water. They should
> get on with the task of complying with the law and playing by the rules.
> Bell Atlantic in particular has a long way to go in complying with its
> obligations to data CLECs such as Covad.
>
> Dhruv Khanna, for Covad