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than more, a good thing in light of the industry s current troubles. One could argue that well-intended regulatory strictures have in fact done damage. Consider the case of WorldCom once again. The company s original plan in the late 1990s was to challenge local service providers all over the world by creating a broadband voice and data IP network through acquisitions and mergers. The regulators, concerned by WorldCom s aggressive plans, felt that the intended company looked too much like a monopoly. They forced the divestiture of MCI s internet company to Cable & Wireless and rejected the proposed merger with Sprint because of fears that they would control 80 percent of the long-distance market. This decision was made while long-distance revenues were plummeting due to the influence of such disruptive technologies as multichannel optical transport and IP. The result is two badly weakened companies that have not yet recovered and may not. Ironically, they could now be prime acquisition targets for the ILECs. (Although, at the time of this writing, competitors are calling for the dismemberment of MCI over arguments that their reentry into the market would give them an unfair competitive advantage, particularly in light of their unethical behavior). Another example is AT&T itself. There was a huge expectation that AT&T would be a big winner in the local broadband access game following its acquisitions of cable properties for its plans to deliver high-speed Internet and interactive services. Many analysts expected a market cross-invasion between the ILECs and cable providers, but it has only
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just begun to happen. Cable providers concentrated on adding Internet service and additional channels; telephone companies concentrated on penetrating the long-distance market. Furthermore, when talk of open access and loop unbundling began to be targeted at the cable industry in 2000, AT&T s hopes of a competitive advantage through cable ownership were dashed; they sold their cable properties to Comcast. There were also expectations that ILECs would work hard to penetrate each other s markets, but this never happened, either. Who better than the ILECs knows that network ownership is the most critical factor for success in the local access game If you control the network, you control the customers. More importantly, if you don t have that control, don t get into the game. In the metro market, which is highly dependent on high-speed access technologies such as DSL (and, to a lesser degree, cable and wireless), these regulatory decisions represent pivot points in the evolution of the metro domain. If the FCC chooses to reduce the regulatory pressure on the incumbents, customers will invest in bandwidth at the edge, driving traffic into the metro which will, in turn, drive traffic into the network core.
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Before we discuss the status of current regulatory decisions, let s take a moment to clarify some important terminology that relates to ongoing decisions. As part of the Telecommunications Act of 1996, incumbent local service providers were required to unbundle their local loops in other words, to create a list of all the billable elements that make up a local loop and determine wholesale prices for each element. This exercise would allow ILECs to set reasonable wholesale prices for their local loops to facilitate the creation of competition. Since CLECs were not inclined initially to build their own networks, they instead wanted to simply buy the loop elements for a wholesale price, mark the resulting loops up appropriately and resell them in competition with their ILEC competitors. These were known as unbundled network elements (UNEs). Ultimately, service providers took a different tack by creating what was known as the unbundled network element-platform (UNE-P), which was a technique under which CLECs could lease packages of elements including switching elements in effect, an entire service platform.
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Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com) Copyright 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website.
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