[January 23, 2001]

What's Really Killing non-RBOC DSL Providers

A longtime reader rants that the Baby Bells cannot lose because of unfair advantages provided by the government, courts, and communications regulators.

[Response to the article Baby Bells Bouncing Back on Jan. 19th.]

Dear Editors,

Mr. Thompson recently wrote an article in which he chided the RBOCs for not doing a better job of DSL deployment and indicated that DSL providers are experts in mismanagement. He also went on about ISPs and CLECs bleeding red ink.

Let's look at two recent court rulings along with a few issues that Mr. Thompson didn't discuss and see what's really killing non-RBOC DSL providers:

First, Mr. Thompson ignored the recent Denver court ruling that VoIP customers must pay origination and termination charges for VoIP calls. The customer referred to here is the ISP that must pass these charges on to their subscribers. This in affect stops the toll by-pass and severely limits the power of the IP network so that the RBOC's and incumbent carriers can maintain their stronghold on per-minute charges.

1. As an ISP operator, we pay the same rates you or any other company. We have paid US West-turned-Qwest some of the nation's highest service rates for years under the guise of fixed tariffs and LATA rates. We do not get any wholesale discounts on our invoices. We do, however, get routinely overcharged and misbilled. I challenge you to name any other industry in which we could spend $150,000 a month and not be eligible for a wholesale discount!
   
   
2. The FCC ruled against CLECs and ISPs on the subject of DSL and other services that need to use outlying regenerating and splitting boxes from a CO. The regulators gave RBOCs a quasi-monopoly limiting competitors' access to COs, saying that if a CLEC or ISP wants access to the outlying areas, we'd have to build it.
   
   
3. Then there are the old service and invoicing issues. Billing World magazine some months back stated that they ("the telecoms") know that they over bill customers on 80 percent of all invoices [see "The Fallout of Billing Blunders"]. Do Baby Bells want to fix IT billing errors? Of course not! Wall Street would see a different financial picture.

Do you wonder why virtually every ISP, DSL provider and data CLEC is for sale at bargain basement prices?

So the tariffs control my cost and the RBOC controls the tariffs, but nobody is controlling the quality of service—such is capitalism?

I certainly don't mind competing with the RBOCs, but I would at least like a chance to win. DSL relies on interconnection and the system is so bad that even well-funded ISP or CLEC can't even break even on reselling access. The government and the FCC just sit on the sidelines and let a bad situation turn worse.

Maybe some DSL folks have been mismanaged. However, the RBOCs were given a license-to-steal business model.

Right now there is no business opportunity in trying to find the financing to capitalize on providing DSL services in this environment.

It doesn't take a rocket scientist to see what is happening or that it is going to get worse. Thanks for listening, it's just to bad we can't get enough folks to stand together and make a difference, change the rules, and level the playing field for DSL services.

Very Truly Yours,
Ed Larson