Verizon says TelePacific, competitors have plenty of time to respond copper retirement notices

Verizon (NYSE: VZ) says that TelePacific and other CLECs have plenty of time to respond to the ILEC community's efforts to retire copper in their wireline serving areas.

At issue is a request TelePacific made from the FCC in November for further clarification from the FCC on copper retirement could delay the telcos' transition to fiber and IP-based services.

TelePacific asked the FCC to examine the relationship between 251(b) retirement process and the Section 214(a) service discontinuance process. The CLEC is concerned that an ILEC's copper loop retirement could potentially cause it from having to discontinue provisioning service to a community or part of a community.

In particular, TelePacific says that if Verizon or another telco were to retire copper in part of its serving area it would not be able to provide Ethernet over Copper (EoC) services to a number of its existing school, libraries and rural healthcare clinic customers (RHC). Out of the 96 of these customers it serves under the e-Rate and RHC programs, the CLEC said that "63 have no fiber-based broadband alternative."

"Should the ILEC retire any portion of the copper route TelePacific uses to provide Ethernet over Copper, it is likely that TelePacific would no longer be able to offer those customers a competitive broadband service at reasonably comparable rates," TelePacific said in a FCC filing. "Although 32 schools/libraries/RHC clinics have a fiber based alternative near net, the costs of a third-party Ethernet provider building to the customer likely would make continued competitive broadband service uneconomical."

TelePacific said that if a service provider decides to retire copper that a competitor uses to provide services, and if that competitor decides not to continue offering a particular service at the time the copper is actually retired, then the competitive provider might have to discontinue service without receiving authorization.

However, Verizon says that not all of the events TelePacific cites will actually happen every time it retires copper in a part of its wireline serving area.

"TelePacific's request presupposes that a series of potential events will occur in every copper retirement, each of which is contingent at best and none of which is certain to occur in practice," Verizon said in a FCC filing. "The Commission has already considered and rejected the threat of these possible contingencies when balancing the provisions of the Technology Transitions Order."

Verizon added that competitors like TelePacific have a number of choices of service and they will have plenty of notice when copper will be retired. In areas where it does retire copper, Verizon will offer alternative fiber-based services to competitive carriers. 

"As an initial matter, providers that retire copper may continue to offer services over other facilities that could meet the needs of competing carriers," Verizon said. "Alternately, other providers in the area may offer a competing option, or a carrier may decide to invest in its own facilities. Second, competitors have substantial time to respond to a copper retirement. Under the Commission's new timeline, providers must give at least six months' advance notice of proposed copper retirement to interconnecting carriers. In contrast, the Section 214 process for a carrier in the position TelePacific posits to discontinue a service usually takes just 60 days."

So what options do TelePacific and other competitors have besides copper-based loops?

One option is to purchase wholesale Ethernet circuits from ILECs. However, TelePacific said this options is very expensive and aren't practical to use for current and new customers.

"Instead of making purchases easier, the forbearance granted by the Commission regarding ILEC provided dedicated Ethernet service has led to more complex contracts, more byzantine pricing and discount structures on top of higher prices overall," TelePacific said. "As the Commission observed in the Technology Transitions Order, 'replacement of DS1 service with a 2 Mbps Ethernet service in Kings Point, Florida would result in an 800 percent input price increase.'"

Building out fiber is another option. But the problem is that in areas where TelePacific has used EoC with unbundled network element (UNE) loops from the ILEC, it found that the low concentration of customers makes deploying its own fiber or renting fiber from another provider like Level 3 too expensive.

"Rather than using an ILEC wholesale input as a copper loop replacement, TelePacific could deploy its own fiber or look for third-party fiber," TelePacific said. "But in the locations where TelePacific uses EoC with UNE copper loops it has already determined that an investment in fiber is not economic due to the high cost of fiber deployment and limited revenue opportunities available in a particular location. This is not surprising since TelePacific has determined that fiber facilities from its third party vendors (including ILECs) are only available at 11% of the locations where TelePacific serves customers."

For more:
- see Verizon's FCC filing (PDF)
- see TelePacific's FCC filing (PDF)

Related articles:
Verizon says XO's 1-year copper retirement proposal will create unnecessary costs, delay IP transition
Verizon says CWA created a false impression of the state of its copper network
Verizon says unbundling 64 Kbps voice channels over fiber will impede copper retirement
US Telecom says FCC's IP, copper retirement proposals will slow migration

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