[100496] in North American Network Operators' Group
RE: Internet access in Japan (was Re: BitTorrent swarms have a deadly bite on broadband nets)
daemon@ATHENA.MIT.EDU (Rod Beck)
Wed Oct 24 15:10:00 2007
Date: Wed, 24 Oct 2007 20:07:23 +0100
From: "Rod Beck" <Rod.Beck@hiberniaatlantic.com>
To: "Steve Gibbard" <scg@gibbard.org>, <nanog@merit.edu>
Errors-To: owner-nanog@merit.edu
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> Exactly. And because they installed fiber, the FCC has ruled that they =
> do not have to provide unbundled network elements to competitors.
It's this last bit that seems to be leading to lots of complaints, and=20
it's the earlier pricing of "unbundled network elements" at or above the =
cost of complete service packages that many CLECs and competitive ISPs=20
blamed for their demise. Some like to see big conspiracies here, but =
I'm=20
not convinced that it wasn't just a matter of bad planning on the parts =
of=20
the ISPs and CLECs, perhaps brought on by bad incentives in the law.
I don't think this was what was intended. My impression is that the=20
wholesale copper was supposed to be a temporary bridge to allow the new=20
entrants time to build infrastructure of their own. That's why the =
rules=20
about sharing didn't apply to infrastructure built by the ILECs later.=20
But new entrants building their own infrastructure generally didn't=20
happen. Instead, the end-user ISP operators I was dealing with at the=20
time generally seemed outraged that the evil phone companies, which =
should=20
have been there to sell wholesale services to them, were instead =
competing=20
in their markets. Unfortunately for them, the phone companies not only=20
undercut them on cost, but generally built better networks. Given the=20
impending obsolescence of the phone companies' traditional businesses, =
what=20
else would the phone companies have been expected to do?
The exception to this was the cable companies. They already had some=20
physical plant of their own, but they invested a lot of money in a lot =
of=20
new construction. Many of them didn't do financially well on the deals, =
but even those who ran out of money left behind infrastructure that is =
now=20
effectively competing.
This isn't to say the original encouragement of CLECs using ILEC copper =
in=20
the 1996 telecommunications act wasn't without benefits. I rather doubt =
the ILECs would have gotten as interested in DSL as they did, if there=20
hadn't been the threat of losing the business to competition. But given =
that improvements in speed since the initial crushing of the upstarts =
have=20
been mostly limited to trying to match the capabilities of the cable=20
companies, perhaps it wasn't the best strategy for the long term. If=20
those who want to compete need to build some infrastructure of their =
own,=20
and if anybody is successful in doing so, that should have a much bigger =
impact in terms of putting long term pressure on the ILECs to provide=20
better service.
That's where I disagree. The economic argument is that it is more =
efficient to share the Last Mile subject to rate of return constraints =
than for a dozen carriers to build their own Last Mile facilities.=20
In fact, it is extremely naive to think that long term all these =
carriers would actually build their own Last Mile facilities. It is not =
economically sustainable or efficent to have massive overbuilding.=20
Simply put, if the ILEC loses a customer to the competition, why not use =
the ILEC copper pair to reach that customer? Given copper pairs do have =
the ability to provide the services most residential customers want =
(except for a bloggers who insist every needs a 10 gig wave to their =
home), why waste scare econonomic resources to do overbuilding?
In Europe unbundling has worked well and led to a highly competitive =
market where no such market would exist in its absence. All of this =
suggests that the problem was not the 1996 Telecom Act, but the ability =
of the incumbents to use the Courts to undermine (which they did quite =
successfully) and a lack of political will. You can't get away with =
bizarre legal interpretations on this side of the Atlantic like you can =
in the States. If European regulatory agencies want unbundling, they get =
it and the PTTs make sure it works or they are subject to more than =
Mickey Mouse fines a la FCC.=20
And there is no expectation that this a stop gap measure. Unbundling =
will exist as long the competitors want to exist.=20
Regards,=20
Roderick.=20
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<TITLE>RE: Internet access in Japan (was Re: BitTorrent swarms have a =
deadly bite on broadband nets)</TITLE>
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<P><FONT SIZE=3D2>> Exactly. And because they installed fiber, the =
FCC has ruled that they<BR>
> do not have to provide unbundled network elements to =
competitors.<BR>
<BR>
It's this last bit that seems to be leading to lots of complaints, =
and<BR>
it's the earlier pricing of "unbundled network elements" at or =
above the<BR>
cost of complete service packages that many CLECs and competitive =
ISPs<BR>
blamed for their demise. Some like to see big conspiracies here, =
but I'm<BR>
not convinced that it wasn't just a matter of bad planning on the parts =
of<BR>
the ISPs and CLECs, perhaps brought on by bad incentives in the law.<BR>
<BR>
I don't think this was what was intended. My impression is that =
the<BR>
wholesale copper was supposed to be a temporary bridge to allow the =
new<BR>
entrants time to build infrastructure of their own. That's why the =
rules<BR>
about sharing didn't apply to infrastructure built by the ILECs =
later.<BR>
But new entrants building their own infrastructure generally didn't<BR>
happen. Instead, the end-user ISP operators I was dealing with at =
the<BR>
time generally seemed outraged that the evil phone companies, which =
should<BR>
have been there to sell wholesale services to them, were instead =
competing<BR>
in their markets. Unfortunately for them, the phone companies not =
only<BR>
undercut them on cost, but generally built better networks. Given =
the<BR>
impending obsolescence of the phone companies' traditional businesses, =
what<BR>
else would the phone companies have been expected to do?<BR>
<BR>
The exception to this was the cable companies. They already had =
some<BR>
physical plant of their own, but they invested a lot of money in a lot =
of<BR>
new construction. Many of them didn't do financially well on the =
deals,<BR>
but even those who ran out of money left behind infrastructure that is =
now<BR>
effectively competing.<BR>
<BR>
This isn't to say the original encouragement of CLECs using ILEC copper =
in<BR>
the 1996 telecommunications act wasn't without benefits. I rather =
doubt<BR>
the ILECs would have gotten as interested in DSL as they did, if =
there<BR>
hadn't been the threat of losing the business to competition. But =
given<BR>
that improvements in speed since the initial crushing of the upstarts =
have<BR>
been mostly limited to trying to match the capabilities of the cable<BR>
companies, perhaps it wasn't the best strategy for the long term. =
If<BR>
those who want to compete need to build some infrastructure of their =
own,<BR>
and if anybody is successful in doing so, that should have a much =
bigger<BR>
impact in terms of putting long term pressure on the ILECs to =
provide<BR>
better service.<BR>
<BR>
That's where I disagree. The economic argument is that it is more =
efficient to share the Last Mile subject to rate of return constraints =
than for a dozen carriers to build their own Last Mile facilities.<BR>
<BR>
In fact, it is extremely naive to think that long term all these =
carriers would actually build their own Last Mile facilities. It is not =
economically sustainable or efficent to have massive overbuilding.<BR>
<BR>
Simply put, if the ILEC loses a customer to the competition, why not use =
the ILEC copper pair to reach that customer? Given copper pairs do have =
the ability to provide the services most residential customers want =
(except for a bloggers who insist every needs a 10 gig wave to their =
home), why waste scare econonomic resources to do overbuilding?<BR>
<BR>
In Europe unbundling has worked well and led to a highly competitive =
market where no such market would exist in its absence. All of this =
suggests that the problem was not the 1996 Telecom Act, but the ability =
of the incumbents to use the Courts to undermine (which they did quite =
successfully) and a lack of political will. You can't get away with =
bizarre legal interpretations on this side of the Atlantic like you can =
in the States. If European regulatory agencies want unbundling, they get =
it and the PTTs make sure it works or they are subject to more than =
Mickey Mouse fines a la FCC.<BR>
<BR>
And there is no expectation that this a stop gap measure. Unbundling =
will exist as long the competitors want to exist.<BR>
<BR>
Regards,<BR>
<BR>
Roderick.<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
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