Salt Lake City Weekly just ran a story on Qwest’s attempts to limit competition and it looks like XMission isn’t alone. The CFO of Fibernet, Lee Livingston, says they have also experienced getting cut off from newer infrastructure and getting their customers poached. Tellingly, the Qwest PR flack tasked with responding refused to dispute the accuracy of the recorded phone call with their rep, instead trying a weak sauce accusation that it had been fabricated or altered. (Hey Qwest? That’s pretty much an admission of guilt and makes you look petty.) Fibernet used to complain to the FCC about these problems and gave up after they got no results.
The short of it is that the new era of competition that was supposed to be ushered in by the Telecommunications Act of 1996 flamed out almost as fast as it arrived. Incumbents have been actively thwarting wholesale customers to lock the market back up while claiming that they still have sufficient competition. Open networks like UTOPIA are the last chance to correct this market imbalance. And yes, it will be expensive and painful. Most mistakes are.
The Public Service Commission used to produce an annual report to the legislature entitled “The Status of Telecommunication Competition in Utah.” The last report was in 2004 during the unbundled network elements debate, and included the following analysis:
“CLECs claim that they will not be able to use the UNE platform (“UNE-P”) strategy to attract
new subscribers under the FCC’s new interim rules, because after the six-month freeze, if new
permanent UNE rules are not implemented, they will be subject to UNE-P pricing based on the
ILEC’s notion about the market value of UNE-P, if it is available at all. A CLEC providing end-user
service via UNE-P can operate with significantly less up-front capital investment in
telecommunications infrastructure than if they purchased or built networks directly. Therefore, the
availability and price of all UNEs, especially UNE-P, are key determinants of CLEC market entry,
and the lack of UNE-P as a market entry method may well be a significant barrier to entry.
Uncertainty in the marketplace over the outcome of litigation in this area plagues the competitive
marketplace and has recently chilled competition in markets throughout the nation, including Utah.
UNE-P accounted for 26% of the competitive lines used to serve customers in 2004. This
represents 48% of UNEs, or 76,942 total lines served via UNE-P. As predicted by the critics of the
District Court’s and the FCC’s current approach, the results of this case have begun to trickle down.
AT&T has already announced plans to stop marketing residential phone service in Utah as well as
the rest of the nation as a result of the court ruling that eliminates most unbundled network element
rules. The company plans to service its current Utah residential customers and will continue to focus
on its business segment, but will not invest money to obtain new residential customers. AT&T also
announced plans to raise its rates in most of several local calling plans throughout the nation in order
to increase revenues from its residential business to cover the higher costs it expects to pay for the
lines it leases.”
The report’s conclusion stated: “Based on the current regulatory uncertainty and hard-to-quantify substitution of alternative
services, the future of competition in the basic local exchange markets is unknown. The significant
steady growth of access lines that began in the late 1980s and continued to increase through the
1990s and into the early 2000s appears to have reversed. Whether the number of access lines will
increase or decrease in the near future is unclear. The impact of CLECs not being able to enter the
market via UNE-P has yet to be determined, but may potentially bar competitors that would have
entered the market having little or no initial capital, and may require potential competitors to build
duplicate facilities to enter the market. It is likely that the current trend will continue with various
services being offered in bundles, such as wireless, local and long distance, and broadband packages.
We will continue to work to balance the interests of incumbents, competitors, and customers while
promoting competitive choice in the telecommunications market in Utah.”
We all know now how the UNE debate went, and the resulting impact on competition. Unfortunately, the legislature decided to discontinue these reports, for whatever reason we can speculate.