Windstream says incumbents' tariffs, network ubiquity inhibit CLEC IP transition

Windstream isn't opposed to making a transition to IP and fiber, but in the markets where it operates as a CLEC the service provider says it is at a disadvantage in terms of gaining access to existing local network infrastructure.

While cable and other competitors have been expanding their last mile infrastructure, the reality is that they lack the ubiquity of reach that incumbent local exchange carriers (ILECs) like AT&T (NYSE: T) and Verizon (NYSE: VZ) gained into buildings and existing network infrastructure.

"With their protestations that 'there are no 'incumbents'' in the Ethernet market, and their assertions of robust competition for the provision of Ethernet, the Large ILECs seek to obfuscate the fact that the IP transitions planned for their own operations are largely underwritten by their position as the historical monopolist because they can leverage their existing network infrastructure and substantial customer base," Windstream said in a FCC filing. "Fiber communications networks have existed since the 1970s, and as Windstream well knows in its capacity as an incumbent, many legacy loops used to transmit DS1 and DS3 services are composed of fiber. Even 'new' fiber builds repurpose legacy unbundled network infrastructure, such as buried conduit, pole attachments, and building entry portals."

Additionally, the CLECs lack the same customer scale that the ILECs had built out during the Bell System days when they were the only carrier in a given market for business customers.

"CLECs do not possess a massive customer base like ILECs, whose first-to-market historical advantage as the designated monopolist allows the ILEC to spread network costs over a larger number of locations within the same ring distance," Windstream said.

But access to existing infrastructure and a large customer aren't the only issues Windstream and others face in dealing with ILECs in making a transition from TDM to IP-based services like Ethernet.

Echoing similar arguments made by fellow competitive carrier Level 3, Windstream points out competitive carriers are constrained in making the TDM to IP transition because of the tariff commitments they have to adhere to.

Fellow competitive carrier Level 3 Communications said that by easing restrictions on who they buy bandwidth from could boost competitive carriers' revenues by as much as $86 million combined, for example.

While the rules amongst large incumbent telcos vary, their plans make CLEC customers commit to long-term purchases of incumbents' special access services.

"Yet while ILECs themselves are taking advantage of the benefits of technology transitions, including lower costs, their tariff pricing plans essentially prevent carrier customers from making the same transitions by locking them into high levels of TDM-based expenditures," Windstream said in the FCC filing. "As Windstream noted in its dedicated services rulemaking comments, certain Large ILEC tariffed commitment plans impose punitive shortfall charges if a wholesale customer fails to meet the minimum committed volumes based on historic TDM special access purchase levels, and disallow that customer to "count" purchases of Ethernet circuits from the same ILEC toward that minimum commitment."

While ILECs like Verizon offer a means for wholesale carriers to migrate from DS1 or DS3 special access service to next-gen IP-based Ethernet, Windstream said that its provisions are "very narrow and difficult to invoke and implement" and that "no new customer location can qualify for the transition and count toward Windstream's commitment level."

Windstream has been an advocate of reducing access costs it pays to AT&T and Verizon.

Under the leadership of its CEO Tony Thomas, Windstream has set a plan to reduce $1 billion in additional costs it pays on wholesale access to deliver services to its multisite business customers.

For more:
- see the FCC filing (PDF)

Related articles:
Windstream's Thomas: We see an opportunity to reduce $1B in special access spending
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Windstream takes $175M in Connect America Funds, sets broadband expansion to 400K rural locations
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