As lawmakers prepare to rewrite the Telecommunications Act of 1996 (see the definition of the word CLEC) basic arguments about the history and future of telecommunications have immediate impact.

[July 26, 2004]

On the ISP-CLEC list in July, JT posted a link to a story:

Battle lines are drawn on crafting Telecom Act II

[RB replied] "I really don't see evidence of new technologies that eliminate the need to provide access to the Bells' landline networks. I would love to know what they are."

[JT shot back] "VoIP over cable, VoIP over Wireless, VoIP over Powerline, Cellular"

[FG argued] "No, since third parties (CLECs, ISPs) don't have access to cable, (most) wireless, or powerline—they're not common carriers.

But the usual VoIP fanatic doesn't worry about that—they assume, and Powell likes them to believe this—that IP is magical, and needs no physical layer. It finds a path. And as to cellular, low-bandwidth compressed voice?"

[RB added] "I don't see how VoIP per se changes anything. You still need transport and access.

Look at the record. Cable telephony has about 2 percent of the residential market and far less of the business market. VoIP over narrowband wireless doesn't make a dramatic difference either. Powerline is unproviden.

And cellular has hardly affected the business market.

And remember, the RBOCs dominate cellular. So RBOC cellullar versus RBOC landline?"

[JT agreed] "You're right. The ILECs will have to make some money, but it may end up being far less than they get now. All those unproven technologies like wireless and BPL. I keep forgetting that it is Game Over and to put my money in real estate."

RL started a new thread on FCC Chairman Michael Powell with this note:

I would suggest you listen to Michael Powell's comments at the recent Always On conference in SV. He outlines very clearly how he sees the world moving, but how he is hamstrung to get us there.

[FG interjected] "I see from Powell's blog that you're his friend and supporter. So here's a quote from Powell explaining, in writing, his view:

Our vision is to solve the one-wire dynamic by driving multiple broadband platforms to reach people. This is why we have adopted policies to push for DSL, Cable Modem, Broadband over Powerline, Wifi, Wmax, satellite broadband and ultrawideband technology.

In other words, instead of making maximum use of a natural-monopoly embedded facility (the local loop), he pretends that there are sufficient alternative means of transmission, so that the owner of the loop—the ILEC—can have its common carrier obligations lifted, in order to maximize its monopoly profits. And at the same time have its unbundling obligations lifted. After all, non-common-carrier cable, BPL, Wifi, WiMax, satellite, and UWB can all be named in one fscking sentance!

But they're no solution, period. What's necessary is total unbundling of the monopoly loop plant, both new and old networks, so that the owner of the monopoly plant gets a fair rate of return, enough to justify continued investment in the network, but not an Enronesque monopoly profit.

Because cable is only a second option at the retail-residential level, no alternative at all for business users, and no avenue of access for ISPs who want to sell service to subscribers. The Powell Cable-ILEC duopoly is a disintermediation model, where the retail/vertical ISPs, who made the Internet available to the public, are disintermediated out of existence by wire owners.

BPL's a farce. Wireless is either too costly or too limited to replace the loop. We've said it all before. Powell is just looking for plausible deniability while he flouts the letter and the spirit of the law. But no worry—next year he'll have a good job with an ILEC or one of their law firms. Count on it."

1. The bottom line is competition

>2. Vertical integration will not happen

3. The elusive goal of a truly competitive industry