Friday, November 07, 2008

CLECs fear loss of access to copper loops being retired and replaced with fiber

Competitive Local Exchange Carriers (CLECs) established under the federal Telecommunications Act of 1996 that requires Incumbent Local Exchange Carriers (ILECs) to sell them access to their copper cable loops apparently fear the copper is literally about to be pulled out from under them and replaced with fiber, leaving them without access to their customers.

An organization of California CLECs, the California Association of Competitive Telecommunications Companies (CALTEL), petitioned the California Public Utilities Commission to adopt rules requiring ILECs to obtain advance approval from the CPUC before retiring copper loops and replacing them with fiber and demonstrate doing so would be in the public interest.

The CPUC declined, instead requiring ILECs to notify the CPUC and all CLECs interconnected with their copper plants before replacing copper with fiber. In addition, ILECs must engage in "good faith commercial negotiations" CLECs that want to purchase or lease the copper loop, the CPUC said in a Nov. 6 news release.

"I believe that this decision balances state and federal goals of promoting the deployment of broadband networks against the interests of competitors to retain access to the copper loop," Commissioner Rachelle Chong stated in the news release.

ILECs have long chafed under the line sharing requirements of the 1996 federal reform law and have dragged their feet and litigated with CLECs seeking to connect to their lines. Apparently CLECs now fear ILECs are about to use their ultimate weapon to make them go away for good, rendering them irrelevant by replacing their copper with fiber since they don't have to provide CLECs access to their proprietary fiber under a 2006 U.S. Court of Appeals ruling.

But ILECs have largely resisted employing the fiber strategy on CLECs since it requires them to make substantial investments in upgrading their wireline infrastructures that they have been reluctant to make. It's possible ILECs are now concluding doing so is worth it because it both disposes of pesky CLECs while also enabling them to exclusively offer far more advanced IP-based services that can be more reliably delivered over fiber than copper.

It will be interesting to watch how this plays out in California and other states and whether CLECs will bid on telco copper loops made obsolete by fiber. Probably few will since copper does not provide a future growth path for offering advanced services due to its technological limitations as have been painfully illustrated with the limited range and throughput of DSL over copper. In addition, aged copper loops are likely to be a low repair priority for ILECs, making it difficult for CLECs to provide reliable service. This could be the beginning of the end for CLECs.

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