COMMENTS OF THE COMMERCIAL INTERNET EXCHANGE
ASSOCIATION
The Commercial Internet eXchange Association ("CIX"), by and
through undersigned counsel, hereby submits its comments on the
Federal Communications Commission's ("FCC" or "Commission") Further
Notice of Proposed Rulemaking ("FNPRM") in the above-referenced
proceeding concerning long-term standards and practices for spectrum
compatibility and line sharing. The Commission issued this FNPRM and
companion First Report and Order in order to remove barriers to
competition and adopt measures to promote competition in the
advanced services markets. The measures taken in the instant
proceeding will create incentives for advanced service providers to
innovate, develop and deploy new technologies.
I. SUMMARY
CIX is a trade association whose member companies represent over
150 Internet Service Provider networks that handle over 75% of the
United States' Internet traffic. CIX works to facilitate global
connectivity among commercial Internet Service Providers ("ISPs") in
the United States and throughout the world. CIX supports the
deployment of digital subscriber line ("DSL") services and other
data access solutions that encourage the evolution of a competitive
data access market. To that end, CIX supports the institution of
mandatory DSL line sharing as a means to facilitate the development
of a competitive market for the provision of advanced services
(e.g., DSL). Competition in the DSL market will allow CIX members to
choose from a host of DSL providers or to provide such service
themselves, allowing them to compete directly with ILEC-affiliate
Internet offerings.
Mandatory DSL line sharing is essential to the development of a
competitive market for the provision of advanced services. Shared
line access makes it possible for a competing carrier or ISP to
offer advanced services over the same line that a consumer uses for
voice services, without requiring the competing carrier to also
provide voice service to its customers. As the Commission noted,
"allowing consumers to keep their voice provider while allowing them
to obtain advanced services on the same line will foster consumer
choice and promote innovation and competitive deployment of advanced
services." Moreover, the ability of ISPs and competitive carriers to
provide such advanced service offerings on a more efficient and
expeditious basis will ultimately benefit consumers with lower
prices.
II. CONSUMER CHOICE FOR ISP
SERVICES MUST BE PRESERVED IN THE DSL ENVIRONMENT
A.
Competition for DSL Will Further a Competitive Internet
Market
The availability of reasonably priced high-speed, broadband
Internet access to residential customers will significantly increase
use of the Internet. However, if a small group of powerful companies
are able to effectively keep competitive DSL providers out of the
market through the imposition of unnecessary and/or duplicative
costs (e.g., requiring stand-alone lines to offer competitive DSL
service), the diversity and vitality of the Internet industry will
be in serious jeopardy. If a competitive market for the provision of
DSL transport services is threatened, so too is the vitality and
growth of the ISP market which relies on reasonably priced transport
services. Through this FNPRM, the Commission has the opportunity to
ensure that the introduction of new transport technologies like DSL
service are not stifled by the ILECs' control over the local
loop.
Line sharing is critical to preserving consumer choice for
Internet offerings. As advanced services are deployed, the new
technological architectures for the provision of such services
should not result in a reduction in the number of ISPs offering
service to consumers. Without mandatory line sharing, there is a
significant threat that many existing ISPs will be forced out of the
market because of their inability to obtain reasonably priced
transport services. This threat is a direct result of the continued
ILEC monopolies over the local telephone markets. If Commission
action is not taken in the form of mandatory line sharing, success
of our nation's ISPS ultimately will be determined by their access
to the local loop to provide advanced services rather than by the
diverse and innovative products and services that they offer their
customers.
It is critical that the Commission not underestimate the
importance of adopting rules that will ensure the continued growth
of a dynamic and diverse ISP industry. Today, the vast majority of
consumers obtain their Internet services from independent ISPs, not
the Internet offerings of the ILECs. Additionally, approximately
ninety-six percent (96%) of Americans have access to at least four
(4) ISPs. This competitive ISP market is in part responsible for
much of the growth in the Internet industry. However, emergence of a
similarly competitive ISP market in the advanced services arena is
dependent on the emergence of a competitive market for efficient and
competitively priced transport services (e.g., DSL). Without
competitive services connecting the end-user to the ISP, the
ILEC-affiliated ISP stands to dominate the market to the detriment
of consumer choice.
B. An Unregulated Internet Industry That
Offers Innovative Services Must Be Preserved
Effective ISP choice exists when a customer can select the
services of any ISP within the market and the ILEC would be
indifferent to the customer's choice. As a practical matter,
however, ILECs are rarely (if ever) indifferent. ILECs and their
affiliates are also active in the ISP business, and their obligation
to offer telecommunications services on a non-discriminatory basis
often conflicts with their incentives to sell an integrated package
of telecommunications and ISP service.
One of the keys to the success of the Internet has been the
potential for complete independence between the Internet services
and the underlying telecommunications carriers. In the dial-up
Internet market, Internet service providers are able to exclusively
offer Internet services through an underlying carrier's facilities.
This telecommunications architecture does not require that ISPs
become carriers in order to offer their services. Some ISPs have
elected to become CLECs, and many have opted to concentrate solely
on Internet offerings and obtain telecommunications services from
other companies. These alternative business models have been very
important to the growth of the medium. The Commission should ensure
that as the advanced services framework over the monopoly ILEC
facilities continues to develop, ISPs are not forced to become
regulated in order to take advantage of new technologies. The
Commission may wish to consider allowing ISPs unbundled network
elements that would allow ISPs to offer their services without
becoming subjected to the panoply of common carrier
regulation.
III. THE COST OF THE LOOP AND RELATED CENTRAL OFFICE EQUIPMENT
COMMON TO DSL AND LOCAL PHONE SERVICE SHOULD BE ALLOCATED IN A
MANNER THAT ENSURES COMPETITION
A. Competitors Should Be Allowed
The Same Opportunities As ILECs To Offer Advanced Services Over The
Same Line On Which ILEC Monopoly Telephony Is Offered
Currently, a competitive provider that offers only DSL service
must offer such services over an unbundled stand-alone loop acquired
from the local exchange carrier. A competitive DSL provider must
recover all of the costs of its stand-alone loop from the service
charges it imposes on its customers. As a general matter, this
requires the provider to charge more for its DSL services, making
its service significantly more expensive than similar services
offered by the ILEC. As such, new entrants providing DSL services
that compete with those offered by the ILEC are at a significant
competitive disadvantage. As the Commission stated, "[s]hared line
access could . . . remove any cost disadvantage that an advanced
services only provider might face if it had to provide advanced
services over a stand-alone line."
Without mandatory line sharing a customer must purchase a second
line in order to connect to services of a competitive data service
provider. In contrast, the ILECs are able to provide both voice and
data service over a single line. If the ILECs are allowed to force
their competitors onto a second line, the customer will rationally
choose to avoid the second-line expense and opt for the ILEC DSL
service. This is a classic example of the ILEC using monopoly
facilities to squeeze out competition. To avoid a virtual "squeeze
out" of competition, it is imperative that the Commission adopt
rules which require mandatory line sharing.
B. Common Costs
Associated With the Provisioning of DSL and Voice Telephony Must Be
Allocated Appropriately
The regulatory right to line sharing alone is not enough to
ensure a competitive DSL market. In order to recognize the benefits
associated with line sharing, the outside plant costs for voice
telephony and DSL service must be allocated in a manner that will
not discriminate against competitors. It is essential that ILECs
properly allocate the costs of their DSL service to ensure that the
costs of operating and maintaining the line are fairly apportioned
among all providers, including the underlying ILEC. Proper
allocation of ILEC costs and fair apportionment of line costs, will
ensure that line sharing is economically feasible.
Bell Atlantic's recently announced Volume Discount Tariff Plan
("VTDP") for its Infospeed DSL Services demonstrates the ease with
which the ILEC can, and will, misallocate costs to benefit their own
DSL offering if Commission action is not taken. The VTDP effectively
undercuts the ability of CLECs and ISPs to competitively provide DSL
and Internet services over the monopoly controlled local loop.
First, Bell Atlantic's tariff charges make it almost impossible
for a competing DSL provider to match Bell Atlantic's retail rates
because such competitive providers must pay prohibitive charges for
a Bell Atlantic loop. In turn, ISPs that seek to obtain DSL service
from a competing DSL provider are limited in their choice of DSL
over which to competitively offer Internet services.
Second, the rates charged by Bell Atlantic for Bell Atlantic DSL
service bundled with Bell Atlantic.net effectively preclude any
profitable provision of competitive Internet service offerings using
Bell Atlantic DSL service. This is so because in addition to the
rates provided as part of the VTDP, there are hidden costs to the
independent ISPs - costs which Bell Atlantic's ISP may not incur.
For example, the VDTP appears to require the wholesaler to provide
its own installation services, yet the Tariff also requires the
wholesaler to pay Bell Atlantic a nonrecurring installation
charge.
Without Commission guidance on appropriate cost allocation, the
ILECs may employ anti-competitive cost allocation methods - even
under a mandatory line sharing regime. If appropriate cost
allocation methods are adopted by the Commission, competition in the
provision of advanced services should emerge.
IV. LINE SHARING IS
TECHNICALLY AND OPERATIONALLY FEASIBLE AND IS AN EFFICIENT USE OF
THE LOCAL LOOP
It is clear that line sharing is technically feasible. A customer
purchasing a provider's DSL service can continue to receive his or
her analog, switched voice service on the lower frequency bands,
while the digital subscriber line service occupies the higher
frequency bands. When an ILEC directly offers DSL, it uses a
splitter to separate the voice and DSL services. Customers of
competitive providers will receive DSL services in the very same
manner in which ILECs provide DSL service to their residential
customers. To the extent that ILECs and competing DSL providers both
deploy compatible digital subscriber line access multiplexer
("DSLAM") equipment, there are no significant technical differences
in the loop provisioning and central office configuration between
the ILECs' DSL services and the DSL line sharing to be employed by
competitive providers.
Additionally, CIX trusts that the Commission will adopt
appropriate interference rules to ensure that providers operating on
a line do not cause significant interference to other providers
operating on the same line. Indeed, it is in all providers' interest
to ensure that their services are not subject to harmful
interference. These interference rules should apply equally to ILECs
and competitors.
The Commission requests comments on ILEC concerns that billing,
accounting and operational issues could complicate the provisioning
of line sharing. Such issues should not impede the provisioning of
line sharing. Indeed, similar "line sharing" arrangements are
currently employed in the provision of long distance services, and
all such issues have been worked out effectively, resulting in a
competitive market for the provision of long distance services.
There is no reason why appropriate billing and operational
arrangements cannot be established when sharing lines for the
provision of advanced services.
V. MANDATORY LINE SHARING IS
AN APPROPRIATE COMMISSION ACTION IN RESPONSE TO THE CONGRESSIONAL
MANDATE OF SECTION 706 OF THE TELECOMMUNICATIONS ACT OF 1996
Among other things, DSL service provides consumers with
"always-on," high-speed broadband Internet access. Broadband
Internet services such as DSL mark the "beginning" of the future of
the Internet. Indeed, more bandwidth will be required to take
advantage of many of the products and services that are being
developed (i.e., video and music on demand) for the Internet. In the
near future, traditional dial-up Internet access may not provide
sufficient speed and capacity to take advantage of advanced Internet
offerings. Unfortunately, the ILECs' virtual monopoly on the local
loop has the potential to severely impede the development of
widespread residential use of broadband services.
As noted, at present, if a customer wants to retain its ILEC
voice service, competitive DSL providers can offer DSL services only
over a stand-alone loop. Thus, residential consumers must install an
additional line at their home in order to obtain DSL services from a
competitive provider. At this time, most consumers have determined
either that the cost of installing an additional line simply to
obtain a competitor's high-speed Internet access is not worth the
additional cost or that the cost is outright prohibitive. Adoption
of rules requiring line sharing will have two immediate effects on
residential use of high-speed, broadband Internet access services:
(1) it will eliminate the cost of installing a largely duplicative
telecommunications line into a consumer's home and (2) it will
increase competition for the provision of high-speed, broadband
Internet access.
Competitive providers of advanced services will be able to offer
their services at prices that are competitive with - and perhaps
cheaper than - those offered by the ILECs. Ultimately, less
expensive, high-speed, broadband Internet access will result in a
greater number of consumers having access to high-speed, broadband
Internet access service. This is a result that Congress envisioned
in its enactment of Section 706 of the Telecommunications Act of
1996. The Commission should make that vision a reality by requiring
mandatory line sharing.
VI. CONCLUSION
The ILECs should not be able to extend their control over the
local loop into an unfair advantage in the provision of advanced
service offerings. Mandatory line sharing will prevent the ILEC from
gaining such an advantage and will further a robust and competitive
DSL marketplace. For all of the above stated reasons, the Commercial
Internet eXchange Association respectfully requests that the
Commission adopt rules requiring line
sharing.
