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Telecommunications Industry REPORT ON THE STATUS OF COMPETITION IN THE TELECOMMUNICATIONS INDUSTRY As of December 31, 2007 This report was prepared by the Florida Public Service Commission’s Division of Competitive Markets and Enforcement This page intentionally left blank. ii TABLE OF CONTENTS List of Figures and Tables.................................................................................................. ix List of Acronyms ............................................................................................................... xi EXECUTIVE SUMMARY .................................................................................................1 CHAPTER I. INTRODUCTION AND BACKGROUND.................................................5 A. Provisions and Goals of Chapter 364, Florida Statutes, and the Telecommunications Act Of 1996 ..............................................................6 1. Chapter 364, Florida Statutes...........................................................................6 2. Federal Telecommunications Act of 1996.......................................................6 B. Methodology............................................................................................................6 CHAPTER II. COMMUNICATIONS MARKET OVERVIEW .......................................9 A. Wireline...................................................................................................................10 1. Mergers/Acquisitions.....................................................................................11 a. AT&T/BellSouth....................................................................................11 b. Verizon...................................................................................................12 c. CLEC Consolidation ..............................................................................12 B. Wireless..................................................................................................................12 C. Voice over Internet Protocol (VoIP) ......................................................................14 1. Over-the-Top Providers .................................................................................15 2. Cable VoIP.....................................................................................................15 D. Broadband..............................................................................................................16 E. Bundled Service Offerings: The Triple Play ........................................................17 F. Regulatory Factors.................................................................................................18 1. Forbearance....................................................................................................18 2. Universal Service Fund..................................................................................19 iii 3. State Legislation.............................................................................................20 CHAPTER III. STATUS OF WIRELINE COMPETITION IN FLORIDA ....................23 A. Wireline Access Lines in Florida...........................................................................23 1. Summary of Results.......................................................................................23 2. Contributing Factors to Access Line Declines...............................................23 3. CLEC Market Composition ...........................................................................24 4. Modified Methodology ..................................................................................25 B. Wireline Market Share and Access Lines..............................................................25 1. CLEC Market Share.......................................................................................26 a. Florida ....................................................................................................26 b. National..................................................................................................28 2. Access Line Overview ...................................................................................28 3. CLEC Market Penetration by ILEC Territory ...............................................31 4. Competitive Presence by Exchange...............................................................32 C. Competitive Market Trends ...................................................................................32 1. CLEC Access Line Provisioning ...................................................................32 2. Residential Access Line Trends.....................................................................33 3. Business Access Line Trends.........................................................................35 D. Rural ILEC Access Line Trends............................................................................36 1. Residential Access Lines ...............................................................................36 2. Business Access Lines ...................................................................................36 E. Pay Telephone Services .........................................................................................37 F. Prepaid Telecommunications Services ..................................................................37 iv CHAPTER IV. WIRELESS, VOIP, CABLE, AND BROADBAND ..............................39 A. Wireless..................................................................................................................39 1. Wireless Subscription Adjusted.....................................................................43 B. Voice over Internet Protocol (VOIP).....................................................................44 1. National Market .............................................................................................44 a. Over-the-Top VoIP Providers................................................................45 b. Facilities-Based VoIP Providers............................................................46 2. Florida Market ...............................................................................................47 a. Over-the-Top VoIP Providers................................................................48 b. Facilities-Based VoIP Providers............................................................48 C. Broadband..............................................................................................................49 1. Nationwide Trends in the Broadband Market................................................50 2. The Florida Broadband Market......................................................................52 3. Emerging Broadband Technologies...............................................................54 a. Deployment of Fiber Optic Facilities......................................................54 b. Cable DOCSIS 3.0.................................................................................57 c. Wireless Broadband ...............................................................................57 i. Third Generation (3G) Wireless ...................................................58 ii. Fourth Generation (4G) Wireless .................................................59 iii. Wi-Fi.............................................................................................59 iv. WiMAX ........................................................................................60 v. Satellite .........................................................................................61 d. Broadband over Power Lines................................................................62 v CHAPTER V. DISCUSSION OF CHAPTER 364, FLORIDA STATUTES, REQUIREMENTS.............................................................................................................63 A. Introduction............................................................................................................63 B. Discussion of Six Statutory Issues.........................................................................64 1. The Impact of Competition on the Availability of Universal Service............64 2. The Ability of Competitive Providers to Make Functionally Equivalent Service Available............................................................................................66 3. The Ability of Customers to Obtain Functionally Equivalent Services at Comparable Rates, Terms, and Conditions.....................................................70 4. The Impact of Price Regulation on the Maintenance of Affordable and Reliable Services.............................................................................................74 5. Definition of Basic Local Telecommunications Services...............................74 6. Any Other Information and Recommendations that May Be in the Public Interest.............................................................................................................76 CHAPTER VI. STATE ACTIVITIES..............................................................................77 A. Carrier of Last Resort (COLR) – Multitenant Environment..................................77 B. Incumbent Local Exchange Company Service Quality.........................................79 1. AT&T.............................................................................................................81 2. Embarq...........................................................................................................81
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