North American Network Operators Group

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RE: Internet access in Japan (was Re: BitTorrent swarms have a deadly bite on broadband nets)

  • From: Steve Gibbard
  • Date: Wed Oct 24 14:23:24 2007

On Wed, 24 Oct 2007, Rod Beck wrote:

On Wednesday 24 October 2007 05:36, Henry Yen wrote:
On Tue, Oct 23, 2007 at 09:20:49AM -0400, Leo Bicknell wrote:
Why are no major us builders installing FTTH today?  Greenfield should
be the easiest, and major builders like Pulte, Centex and the like
should be eager to offer it; but don't.

Well, Verizon seems to be making heavy bets on replacing significant chunks of old copper plant with FTTH. Here's a recent FiOS announcement:

  Linkname: Verizon discovers symmetry, offers 20/20 symmetrical FiOS
service URL:

While probably more "good" than "bad", it is my understanding that when Verizon (and others) provide FTTH (fiber to the home) they "cut" or physically disconnect all other connections to that residence..... so much for any "choice"...

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 it's the earlier pricing of "unbundled network elements" at or above the cost of complete service packages that many CLECs and competitive ISPs blamed for their demise. Some like to see big conspiracies here, but I'm not convinced that it wasn't just a matter of bad planning on the parts of the ISPs and CLECs, perhaps brought on by bad incentives in the law.

The US government decided there should be a competitive market for phone services. They were concerned about the big advantage in already built out infrastructure the incumbent phone companies had -- infrastructure that had been built with money from their monopolies -- so they required them to "share." This meant it was pretty easy to start a DSL company that used the ILEC's copper, but seemed to provide little incentive for new telecom companies to build their own last mile infrastructure. Once the ILECs caught on to the importance of this new Internet thing, that meant the ISPs and the new phone companies were entirely dependent on their biggest competitor for services they needed to keep functioning. The new providers were vulnerable on all sorts of fronts controlled by their established competitors -- pricing, installation procedures, service quality, repair times, service availability, etc. The failure of the new entrants seems almost inevitable, and given that they hadn't actually built any infrastructure, they didn't leave behind much of anything for those with better plans to buy out of bankruptcy.

I don't think this was what was intended. My impression is that the wholesale copper was supposed to be a temporary bridge to allow the new entrants time to build infrastructure of their own. That's why the rules about sharing didn't apply to infrastructure built by the ILECs later. But new entrants building their own infrastructure generally didn't happen. Instead, the end-user ISP operators I was dealing with at the time generally seemed outraged that the evil phone companies, which should have been there to sell wholesale services to them, were instead competing in their markets. Unfortunately for them, the phone companies not only undercut them on cost, but generally built better networks. Given the impending obsolescence of the phone companies' traditional businesses, what else would the phone companies have been expected to do?

The exception to this was the cable companies. They already had some physical plant of their own, but they invested a lot of money in a lot of 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 effectively competing.

This isn't to say the original encouragement of CLECs using ILEC copper in 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 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 been mostly limited to trying to match the capabilities of the cable companies, perhaps it wasn't the best strategy for the long term. If those who want to compete need to build some infrastructure of their own, 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 better service.