from: Public Knowledge [1]

Verizon’s Ties Really Bind

October 3, 2007
By Art Brodsky

There appears to be a dropped connection between Verizon Executive Vice President Thomas Tauke, who talks with members of Congress and policymakers, and Verizon’s’ customer service representatives, who talk to the populace at large.

The dispute is over the most slender of media – a thin strand of glass, but its impact is immense — the future of telecommunications competition in this country.

At a hearing of the House Telecommunications and Internet Subcommittee Oct. 2, Tauke was asked by Subcommittee Chairman Ed Markey (D-MA) about the Japanese policy of keeping copper wire in service, while Verizon discontinues the use of the copper network when it connects a customer to the FIOS, fiber-based service.

Tauke replied that, “The fact is we don’t disable copper loops. We have not disabled copper loops to any home to which we have extended fiber.” At another point in the hearing, Tauke told the subcommittee: “If the customer wants the copper or wants another carrier to use copper, we put that copper back in.”

I am a recent convert to FIOS. We decided to get the service after our Comcast Internet service sped along at twice the speed of our old 56 k modem. So when I called Verizon during the hearing, I was seen on the company’s records as a FIOS customer. I called twice, to speak to two different customer service representatives. I asked each one, if I were dissatisfied with the FIOS, how would I go back to a copper connection? Each time I got the same answer. I can’t.

One Verizon employee told me, “That’s policy and procedures. Once you go on fiber, you have to stay on fiber.” Another said that the fiber service was so expensive to install, the company wouldn’t let customers go back to copper.

Perhaps there is some room for interpretation here. Verizon may not “disable” the copper lines to your house. Then again, you wouldn’t be allowed to use them again, either. And it’s not just you. Whoever buys the house later on would be stuck with your decision to go to fiber.

Someone doesn’t have the right information. It’s either Tauke, or the people who put together the data for the customer service representatives. It would be nice if they got things straight. The reason this is so important, as also pointed out at the hearing, is that the only way competitors can get access to potential customers is through copper telephone lines. The FCC in its wisdom decided that a telephone company doesn’t have to share its fiber lines although they do, for the time being, still have to allow access to the copper.

Brad Evans, the chairman of Cavalier Telephone, made that clear in the hearing. He needs access to the copper and when telephone companies disable or disconnect or otherwise render it useless, Cavalier may or may not be able to get access to a potential customer – ever. “Our business model would be decimated,” he said. Whoever buys your home for the foreseeable future won’t have the choice to go to a competitor either.

Tauke and Verizon take the position that copper loops are outmoded and expensive to maintain, which is why they are shifting their investment to fiber. But as Markey pointed out, other countries are finding there is still a lot of life left in copper and that the copper lines are necessary to ensure there will be some competition.

That’s one way to look at it. Here’s another. Verizon and, to a lesser extent, AT&T, are building out fiber because they believe they can make more money with it in the long run by selling video services and higher speeds of Internet access. That’s all well and good, to a certain extent. But the fact that they don’t have to share the fiber loops must also play into the strategic decision to exclude competitors.

The decision by the FCC to exclude competition from fiber is essentially a giant loophole that needs to be closed. It might have made sense when there was little fiber being deployed, but if Verizon and the other companies are true to their word about replacing copper with fiber, then it makes no sense at all – unless the goal is to eliminate competition.

It’s a little like the cable industry’s dodge. In 1992, when cable distributed most of its programming by satellite, Congress determined that any programming delivered by satellite had to be shared with competitors. That decision allowed the satellite TV industry to take off. Clearly, the spirit of the law was that a competitive industry was needed. Cable, however, had a different take. It started distributing programming, primarily valuable sports programming, by fiber.

The cable loophole has never really been closed, but the FCC and Congress may have to act to counter the fiber strategy of the telcos. If Verizon and AT&T continue to deploy fiber, and if that fiber circumvents the supposed national goal of having telecom competition, then sharing the fiber may be the way to go. It may be “new lines” as the saying goes, but the “old rules” should apply to make certain that consumers have at least a hope of more choices and more competition.

If sharing of new lines is suggested, it’s a sure bet that Verizon and AT&T will roll out their old standby – we won’t have any incentive to invest in the new networks if we have to share them. That’s the line they also use when fighting against a non-discriminatory Internet. It’s nonsense in the Net Neutrality context and is nonsense here. A network is more valuable when people use it. If you don’t want to invest in the copper network, at least let some companies that do want to invest have the opportunity to do so. If you want to invest in fiber, let other companies help you pay for it. Everyone wins.