Argument to preserve special access falling apart without government intervention

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Bruce Mehlman

One of the commonly heard objections from some competitive local exchange carriers (CLECs) to the transition away from the aging telephone network to modern high-speed broadband networks is that the transition will somehow harm special access services, the wholesale services commonly purchased from incumbent telephone companies by other communications companies used to serve retail businesses customers. CLECs typically argue that only regulation can protect these services from modernization of the legacy telephone network.

Nonsense.

It never really made sense to me why special access customers--primarily business customers--would want to (or should) be stuck with decades-old technology rather than using IP-based networks to reach their customers in new ways. But the argument of some CLECs that we need to preserve the old technologies (really, preserve the CLECs' business models) for the benefit of special access customers is starting to fall apart. And it's falling apart without government intervention, through the use of private, market-based agreements.

AT&T (NYSE: T), for instance, has recently begun a program to help migrate exiting TDM-based special access customers to Internet Protocol (IP) based services. TelePacific Communications, a California CLEC, is now working with AT&T to move the transition forward by offering Ethernet data and IP voice, in the process transitioning its own business model as well as the technologies its customers enjoy. As the company said in a statement: "These groundbreaking agreements allow for the smooth migration to IP-based services while legacy TDM services remain available."

So just as consumer preference is driving a seamless transition to IP in the consumer marketplace, so business customers also understand the benefits of IP networks and services. 

Those seeking to delay the IP transition sometimes paint a picture of customers thrown into a telecom jungle, with no one to help them. But why? As in virtually any business, why wouldn't communications companies think it is in their best interest to help customers migrate to newer products and services that generate new revenue streams--as what AT&T and Verizon (NYSE: VZ) both appear to be doing in the marketplace today.  

Technologies change, and markets change with them. More and more companies are deciding that it is far better to be in the game, getting customers with the technology of the future, than to have a "business strategy" best described as "better living through regulation." As Dick Jalkut of TelePacific recently said: "We're committed to supporting our customers' requirements today at the same time that we rapidly bring them new capabilities that will help them grow their business."

In short, farsighted wholesale customers of the larger networks are seeking commercial arrangements for Ethernet data and IP voice service through private negotiations rather than depending on government action.

So as we move forward into the next critical phase of the IP transition--the expected local market trials--it will be useful to bear all this in mind. Left to itself, the private sector will develop workable solutions to bring newer technologies to more people and more customers faster and more efficiently than government intervention would ever do. Even more, therefore, those who seek to hold back or delay deployment of next-generation IP networks are doing themselves and their customers a disservice. As the transition continues, will those companies be left behind? Or will they take the side of the future rather than the past?

It's their choice, of course, but government should acknowledge what's actually happening in the marketplace rather than listening to those who favor regulation as the solution, particularly when that regulation will lead to worse telecommunications service for some customers in the service of some CLECs' current business models.

Bruce Mehlman, former Assistant Secretary of Commerce for Technology Policy, is founding co-chairman of the Internet Innovation Alliance, a coalition of businesses and nonprofits working to increase Americans' access to broadband Internet. IIA's membership includes AT&T.