Telcos' Dark Fiber Lures ISPs

The fiber glut is well publicized but little utilized because taking advantage of the telcos' overbuild takes a significant amount of time and a significant amount of complex legal work—fighting the phone company in court to become a customer.

by Max Smetannikov [July 19, 2002]

In this day and age of professed fiber glut, ISPs can still save a bundle if they can afford the time and the lawyers to get incumbent telephone companies to provide them with tariffs for existing dark fiber builds, the latest and the most hush-hush "unbundled network element" telephone companies have to open up for competition.

The legal framework for this process was set up by the FCC three years ago, in 1999. However, market participants say it takes about three years to tear through ILEC opposition and various certification processes in order to get access to the fiber.

Why bother? Imagine getting a pipe going into hard to reach places for a quarter of what it costs to build your own fiber loop or lease a service from one of the fiber builders. In most cases fiber in question is the so-called metro fiber that is not abundantly available.

Carriers that seek to get their hands on this asset have little to go on other than the FCC order. Understandably, there are very few lawyers and product managers who know enough about the inner workings of the telephone industry and could help those ISPs that have CLEC status get some unbundled fiber. Furthermore, the few carriers that have been pursuing dark fiber UNEs, as they are known in the industry, have gone about this process so quietly they managed to fly under the radar screen of most watchdogs.

"The New Hampshire dark fiber case is the first one I have heard of—ever," said Gayle Kansagor, editor of Telecommunications Reports State Newswire, a service provided by Telecommunications Reports International that covers regional telecom regulation on a full time basis.

The case in question is between Verizon and a regional CLEC, CTC Communications. In practice (as opposed to in an ideal world) a CLEC obtains dark fiber UNE by making a formal request to the ILEC, Verizon in this case, to unbundle the fiber, as an amendment or a clause of the state-specific interconnection agreement between the carriers.

The State's Public Utility Commission, the regulator enforcing the agreement, acts as an arbitrator between the two carriers, ruling whether or not the request for dark fiber is justified. A good rule of thumb is that if the ILEC is not using at least 25 percent of its fiber on a particular line between two locations, it has to make some of it available to an ILEC on a tariffed basis.

This is a lucrative deal, since now instead of provisioning services on, say, an OC-3 from an ILEC, an alternative carrier can stick DWDM boxes on two sides of the fiber and not only get all the connectivity it would ever need but also resell wavelengths to other carriers.

Of course, the burden of proof is on the CLEC, and also on the PUC, to make a clear case against ILEC attorneys that there is fiber to be had on particular routes. In New Hampshire, a PUC investigator found there was indeed a whole strand of fiber spanning through several cities that Verizon was not using. Verizon argued against that by citing future SONET deployments, and then a hearing was scheduled. Since the hearing, the companies have apparently settled. CTC is very tight lipped about the outcome of the bid.

"We reached a satisfactory solution that enabled us to go forward with our network buildout, and the arbitration was dropped. Therefore no resolution of the arbitration from New Hampshire is forthcoming," said Alan Russell, CTC's spokesman.

This is not surprising. Ron Young, formerly chief marketing officer of Yipes, which has just re-emerged from chapter 11 reorganization, says the dark fiber UNE process is a strategic asset Yipes was very secretive about.

"We didn't talk about it," said Young. "You do need experienced people who know their way around this race track to do this."

Yipes hired specialists to develop the process to get telco fiber, and it took a year to secure the first contract. However, once the company got the procedure into its knowledge base, getting access to facilities in different states became much easier. Yipes had several such applications pending, and obtained some ILEC fiber in California. In UNE scenarios, Yipes paid 25 percent of what it would cost to get fiber any other way, Young said.

The first wave of UNE deals is already upon us, since most companies that started the process in 1999 are getting to the end of the three year period and are seeing ILECs issue the first tariffs. This doesn't put CLECs and ISPs with CLEC status at disadvantage, because, as the volume of such deals increases, the common body of knowledge about how such deals work also increases, and the delays in dark fiber UNE tariff applications shrink at a corresponding rate.

CoreTel Communications, a wholesale provider of access to ISPs on the East coast of the United States, started its UNE application process in Verizon territory a year ago, and the end is already in sight.

"We hope to have a decision early next year. I think this is a realistic timeframe," said Chris Van de Verg, CoreTel's general counsel.

The dynamics of lighting the ILECs' dark fiber are similar to the dynamics of growing a DSL footprint. However, service providers like CoreTel take into account the fact that CLECs that depended on reasonable provision times were killed by the monopolies, and allow ample time for ILEC resistance and provisioning delays.

Taking into account the ILEC delays, CoreTel plans to start offering services off Verizon's UNE dark fiber in Q2 2003.

— End