more on RBOC vs. RBOC

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Mon, 19 Apr 2004 04:43:08 -0700
From: Joel Snyder <Joel.Snyder () Opus1 COM>
Subject: Re: [IP] RBOC vs. RBOC
To: dave () farber net
Cc: ip () v2 listbox com, dan () danielberninger com

What othes see as a conspiracy not to commit, I see as good business sense.

In our LATA, EVERY SINGLE FACILITIES-BASED CLEC HAS GONE BANKRUPT.  That 
means that every single company, aside from US West/Qwest, that ran fiber 
or copper in Tucson, has been through Chapter 11.  All of them. That's GST, 
E.Spire, and MCI.  All here, all bankrupt.

Now, I'm not going to argue "post hoc, ergo propter hoc," but I can see the 
thinking behind this.  ILECs know the numbers---they built the first 
networks---and they have little incentive to lie or "adjust" those numbers 
to get venture capital.  These are enormous phone companies with a huge 
amount of expertise and knowledge about the economics of building telephony 
networks.  The Bell System used to employ PhD Economists to help them 
understand these kind of things, and this knowledge was not lost.

If they're not rushing out to offer CLEC services in the backyards of their 
competitors, perhaps it's not a conspiracy to not compete, but intelligent 
decisions about where they can and cannot make money.

One thing that the CLECs taught the ILECs was that "cherry picking" was a 
good way to make money.  And that strategy HAS led these companies to 
compete against each other in high-volume/high-dollar/high-margin markets 
such as long distance, Internet, and wireless.

The fact that they're not going after the capital-intensive, 
long-long-long-payoff, low margin wireline customer maybe is just 
supporting evidence to the argument that certain aspects of telephony form 
a natural monopoly in the first place?

jms

--
Joel M Snyder, 1404 East Lind Road, Tucson, AZ, 85719
Phone: +1 520 324 0494 (voice)  +1 520 324 0495 (FAX)
jms () Opus1 COM    http://www.opus1.com/jms    Opus One

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