This year's spring Comptel trade show in Orlando, Fla., once again reflected a competitive industry that's in transition.
The show featured three keynote speeches from members of the service-provider industry and even a lawmaker: Representatives from Google Fiber (NASDAQ: GOOG) and Sprint were keynote speakers, as was Sen. Bill Nelson (D-Fla).
Some of the competitive providers' concerns come from four fronts: consolidation, net neutrality, special access, and gaining access to necessary rights-of-way to string new fiber so they can connect their business customers.
Industry consolidation: Whether it's AT&T (NYSE: T) buying DirecTV (NASDAQ: DTV) or Comcast (NASDAQ: CMCSA) looking to close its deal to acquire Time Warner Cable (NYSE: TWC), the rapidly consolidating telecom and cable industry is raising concerns among competitive providers that serve consumers and businesses.
While Google is rolling out 1 Gbps data services via fiber-to-the-premises (FTTP) architecture, Google Fiber's VP of access, Milo Medin, told conference attendees that it's essential to offer television service.
"What we have found is that while it's not necessary to offer voice service because of wireless substation, if you don't offer a good TV service your ability to compete with incumbents that bundle Internet and TV together is significantly impaired," Medin said.
However, he added that because Google is a newer player, it has to pay much higher prices than incumbent pay-TV providers--a situation that could get worse if the Comcast/TWC merger were to be approved.
But consumer issues are just one part of the concern that competitors cite regarding the Comcast/TWC alliance. Being an advocate of CLECs that serve business customers, Comptel has expressed concern that Comcast has not provided assurance that it would provide ongoing access to CLECs after its contracts with wholesale customer Time Warner Cable expire. A number of small and medium-sized competitive providers use Time Warner Cable and Charter Communications (NASDAQ: CHTR) as alternatives to the traditional incumbents when it comes to wholesale service.
Cable operators play a critical role in the wholesale special-access market. Although cable operators still represent a small portion of this segment, Atlantic-ACM suggests that they have a ripe opportunity to serve as alternatives to competitive players when it comes to providing lower-speed services using their HFC networks.
Net neutrality compromise: Since the Comptel show is dedicated to competition, Nelson discussed how he hoped Republican and Democratic lawmakers could come to an agreement over the net neutrality issue.
He outlined a potential compromise called Title X. Title X would give the FCC the authority to prevent service providers from blocking or slowing down consumer traffic to a specific website, such as Netflix, or carving out special paid prioritization deals; the FCC would have to agree to not reclassify service providers under the Title II element of the Communications Act.
Interestingly, as Nelson outlined his vision, lawsuits challenging the FCC's net neutrality rules started rolling in from industry groups and service providers, such as the ACA, the NTCA and US Telecom. Unlike their peer Verizon (NYSE: VZ), AT&T and CenturyLink (NYSE: CTL) later filed their own suits against the FCC.
Special access: With the FCC having extended the deadline to July for interested parties to comment on its special-access proceeding, Comptel and its members will be arguing against AT&T's proposed special-access rate increases. As the telco phases out T-1 and other TDM-based circuits, a particular concern is whether AT&T will provide competitive rates for IP-based services.
Although special access is a major issue for CLECs delivering business services, it's no less important to wireless operators, which use it to backhaul traffic from cell sites.
Dow Draper, Sprint's president of wholesale and prepaid services, who delivered the third keynote speech, said that in some markets where it is building out its 4G LTE wireless service, it has only one provider to choose from. Draper told the audience that having competitively priced backhaul services will be a key issue in maintaining its wireless network's growth.
Gaining access to rights-of-way and dig-once policies: Despite the nuances of emerging technologies such as Ethernet and fiber-to-the-premises, service providers can't use them effectively to deliver serivce without gaining access to rights-of-way to utility poles and conduits in local towns.
Having access to necessary rights-of-way and a streamlined permitting process within a local town or city is crucial, particularly for competitive or emerging providers, because it means they can proceed with their network buildouts more efficiently.
Progress has been made on the rights-of-way front. The FCC included common carrier requirements in the net neutrality order, giving pole-attachment rights to all Internet service providers. Before this rule change, only incumbent telcos and cable operators could get access to poles.
Google Fiber's Medin said that having access to poles is essential for companies, such as Google, that are looking to build in new cities and that local incumbents should not be allowed to hold up the "make ready" process to pave the way for other competitors that need access to those poles.
Medin and others have also advocated that the FCC work in tandem with other government departments, such as transportation divisions, to permit the laying of fiber conduit along new highway, bridges and roads.
With the telecom industry continuing to go through a new period of consolidation, conversations regarding the above issues will most likely continue when Comptel reconvenes in San Francisco this October.--Sean