CLECs to ILECs: Don't hang up your copper networks!

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Sean Buckley, FierceTelecomTraditional ILECs (incumbent local exchange carriers) may see their copper facilities as nothing more than an aging asset of the legacy voice-only service age, but for competitive telcos serving the business market, copper is still very much in fashion.

Targeting the diverse and often-forgotten-about small to medium sized business (SMB) market, copper has become a sound method to deliver Ethernet over Copper (EoC) to customer sites where a CLEC (competitive local exchange carrier) can't prove a business case to deploy its own fiber or secure an Indefeasible Right of Use (IRU) with another dark fiber provider. And while technology advancements have enabled some CLECs such as PAETEC--now Windstream (Nasdaq: WIN)--to deliver 100 Mbps-based EoC in some areas, most SMB customers want between 2-20 Mbps of bandwidth.

One CLEC that's made continued headway in the EoC game is MegaPath, which just last week announced that it offers its EoC service nationwide in the top 50 national U.S. markets.

But MegaPath isn't the only game in the EoC town. Other CLECs such as Alpheus and XO Communications are being no less aggressive with EoC.  

Alpheus has found a sizeable niche providing both fiber-based Ethernet and EoC services to businesses and other carriers located in the Dallas, Austin, San Antonio, Houston (DASH) region. While the CLEC will build out fiber where there's enough bandwidth demand, it will extend EoC to "marginal" business sites that may only need between 5-10 Mbps.

Likewise, XO Communications has been extending the reach of its EoC service across its nationwide footprint. It currently provides EoC out of 447 COs with plans to offer higher speed 40 Mbps services to eligible customers.

Despite the efforts of these CLECs and others, every competitive provider faces a common threat from the three RBOCs:  AT&T (NYSE: T), CenturyLink (NYSE: CTL), and Verizon (NYSE: VZ), all of which have a desire to replace their aging copper facilities with fiber.

While there have not been any reported instances where copper retirement has affected a CLEC's EoC customers, it is a detractor for anyone trying to make an investment.

"I think it's a general issue for the competitive industry," said Francisco Maella, Chief Operating Officer of Alpheus, in an interview with FierceTelecom. "There's still a lot of value in that copper, and the reality is that taking that asset away from the competitive industry will basically eliminate competition in getting 5 and 10 Megs out to these nominal sites, which is still about 85 percent of the locations that are in a specific Metropolitan Statistical Area (MSA)."  

Maella added that the copper has "been paid for and AT&T still won't build fiber into a lot of these locations anyway."

One ILEC that's been outspoken about retiring copper is Verizon. Fran Shammo, Verizon's CFO, said in September that even though it's not going to expand its FiOS footprint it will migrate what he calls "chronic customers," which require two truck rolls to service the copper line during a six month period.

CLECs do have an advocate on their side in COMPTEL, the long-running advocacy group of the competitive telecom industry.

Earlier this month, COMPTEL filed an ex parte with the FCC following a meeting they had with representatives from the Wireline Competition Bureau and Office of Strategic Planning and Policy Analysis following a meeting with the regulator to discuss the impact of an RBOC's retirement of copper facilities.

This ex parte filing follows another filing the industry forum made in 2009 with the FCC, urging the regulator to develop rules to ensure that the copper networks are preserved. COMPTEL is hoping that it can get the FCC to pass a Notice of Proposed Rulemaking (NPRM) to revise its rules about the ILEC's copper networks.

"Right now, the FCC does not have rules to give competitors access to an ILEC's fiber networks, which are capable of providing broadband service and then they're allowing the ILECs to decommission the copper," said Karen Reidy, vice president, Regulatory Affairs, in an interview with FierceTelecom. "This will then take away the competitive provider's ability to provide broadband service because generally they are dependent, particularly for the small and medium-sized business they will be dependent on the ILEC's last mile loop."

While it's hard to argue that fiber is best network facility to deliver business and consumer services, it's clear that the copper network is still viable. In order to give SMBs—most of which can't and will likely never get access to affordable fiber-based services—the message is clear: ILECs should not hang up their copper networks yet.--Sean