Rule Changes Could Alter Telecom Landscape

By Caron Carlson  |  Posted 2004-12-13

Rule Changes Could Alter Telecom Landscape

As early as this week, regulators plan to issue the latest in a series of rewritten rules governing the obligations of the Regional Bell Operating Companies toward their competitors. The stakes are high in the perennial war between the RBOCs and rival carriers, but if regulators dont get the new rules right, it could be small-business users who have the most to lose.

Small businesses, which dont have the leverage to negotiate contracts with carriers the way large businesses can, increasingly have turned to CLECs (Competitive Local Exchange Carriers) for service. In cities, CLECs serve nearly one-third of the small-business market.

IQ Wired Inc., a small technology consultancy in Denver, switched to Cbeyond Communications LLC about three years ago to take advantage of the CLECs affordable bundle of voice and high-speed data services, said Tatiana Finkelsteyn, president of IQ Wired.

"Cbeyond has allowed us to get a T-1, and we could never afford one before," Finkelsteyn said. "It sort of moved us from a small-business telco environment to what large businesses have."

IQ Wired is saving about $400 per month over the a la carte services that it otherwise would have purchased from the ILEC (Incumbent Local Exchange Carrier), Qwest Communications International Inc., Finkelsteyn said.

"For a larger company, Qwest is great," Finkelsteyn said, adding that her business is too small to support a staff dedicated to telecommunications management. Cbeyond allows users to manage their services online, including bill payment, call forwarding, voice mail, and phone moves and changes.

"Probably the biggest reason I switched is because it is less cumbersome to do things. Anything I want to do, I can do online," Finkelsteyn said. "I dont even have a filing cabinet for Cbeyond bills."

Next Page: Market sufficiently competitive?

Market sufficiently competitive


The rules governing local competition have been under siege since their inception in the Telecommunications Act nine years ago. Congress directed the RBOCs to unbundle elements of their networks and lease those elements to competitors at nondiscriminatory rates and conditions, but legislators left it to the Federal Communications Commission to determine which elements had to be unbundled. The requisite elements have evolved over the years, under the direction of three FCC chairmen and a variety of court rulings. At present, the RBOCs must give rivals access to switching, dedicated transport and enterprise market loops.

Does the FCC weild too much power over IT? Click here to read what eWEEK.coms Jim Rapoza thinks.

From the RBOCs perspective, the market is sufficiently competitive to eliminate many of their network-leasing requirements. To bolster the argument, the RBOCs point to telecom services from fixed wireless and cable operators and even the nascent offerings of satellite and power-line companies.

The stakes in this latest battle are so high for competing carriers that they dropped the distinctions that historically separated them—for example, some relying more heavily on leasing local facilities than others—and pooled their resources in a front against the RBOCs. Last week, the two trade groups representing CLECs in Washington, the Association for Local Telecommunications Services and CompTel/Ascent, announced that they will merge next month.

"It takes size and force to compete in that arena," said Julia Strow, vice president for regulatory and legislative affairs at Cbeyond and acting president of ALTS. If the FCC does not protect CLEC access to necessary local facilities, Strow said, it "will be returning the Bell companies their monopoly of this market."

The merger of the trade groups, with a combined membership of approximately 500 carriers, will help the CLEC industry prepare for intensified battle on a second front on Capitol Hill. Speaking with one voice, the CLECs lobbying group can sidestep charges of partisanship, which hampers their power.

Calling the CLECs goal "a cause for the American people," Sherman Henderson, chairman of CompTel/Ascent and CEO of Lightyear Network Solutions LLC, in Louisville, Ky., said the organizations would "spend whatever it takes" to counter the RBOCs lobbying efforts.

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