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Comments of Verizon, Extension of Section 272 Obligations of Southwestern Bell Telephone Co

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Comments of Verizon, Extension of Section 272 Obligations of Southwestern Bell Telephone Co Comments of Verizon, Extension of Section 272 Obligations of Southwestern Bell Telephone Co. in the States of Arkansas and Missouri, WC Docket No. 02-112 (filed Oct. 13, 2004) Attachment C UNE Fact Report 2004, WC Docket No. 04-313, CC Docket No. 01-338 (filed Oct. 4, 2004) October 4, 2004 VIA ECFS Marlene H. Dortch, Secretary Federal Communications Commission 445 12th Street, S.W., TW-B204 Washington, D.C. 20554 Re: Unbundled Access to Network Elements, WC Docket No. 04-313 and Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, CC Docket No. 01-338 Dear Ms. Dortch: On behalf of BellSouth Corporation, SBC Communications Inc., Qwest Communications International Inc., and the Verizon telephone companies, I am filing the enclosed report titled, “UNE Fact Report 2004.” In accordance with this Commission’s practice, we are filing this letter electronically through the Commission’s Electronic Comment Filing System in the above-referenced matters. Thank you for your assistance in this matter. Sincerely, /s/ Evan T. Leo Evan T. Leo Enclosure Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Unbundled Access to Network Elements ) WC Docket No. 04-313 ) Review of the Section 251 Unbundling ) CC Docket No. 01-338 Obligations of Incumbent Local ) Exchange Carriers ) UNE FACT REPORT 2004 Prepared for and Submitted by BellSouth, SBC, Qwest, and Verizon October 2004 Peter W. Huber Evan T. Leo Kellogg, Huber, Hansen, Todd & Evans, P.L.L.C. 1615 M Street, N.W. Washington, DC 20036 (202) 326-7900 TABLE OF CONTENTS I. COMPETITIVE OVERVIEW..........................................................................................I-1 A. Facilities-Based Competition for Mass-Market Customers......................................I-2 B. Facilities-Based Competition for Enterprise Customers...........................................I-6 C. Outlook ...................................................................................................................I-10 II. FACILITIES-BASED COMPETITION FOR MASS-MARKET CUSTOMERS......... II-1 A. Voice over Packet-Switched Broadband Networks................................................ II-2 1. Competitive Availability, Usage, and Growth............................................ II-4 2. Price, Service Quality, and Functionality ................................................. II-12 a. Economics of Providing VoIP Service .............................................. II-12 b. Service Quality and Functionality ..................................................... II-20 B. Wireless................................................................................................................. II-27 1. Wireless-Wireline Competition ................................................................ II-28 2. Pricing....................................................................................................... II-31 3. Quality and Functionality......................................................................... II-33 C. Circuit Switching and Wireline Loops ................................................................. II-37 1. Competitive Switch Deployment.............................................................. II-37 2. Circuit-Switched Cable Telephony........................................................... II-38 3. Use of CLEC Switches and Unbundled Loops......................................... II-41 III. COMPETITION FOR HIGH-CAPACITY FACILITIES AND SERVICES ...............III-1 A. Competitive Fiber Networks..................................................................................III-3 B. Competitive Fiber Is Concentrated Where Demand Exists ...................................III-7 C. Availability of High-Capacity Services over Competitive Fiber.........................III-10 D. Access to Competitive High-Capacity Facilities .................................................III-16 E. Competitive Analysis...........................................................................................III-26 i 1. High-Capacity Transport.........................................................................III-27 a. Entrance Facilities.............................................................................III-27 b. High-Capacity Transport Between ILEC Wire Centers ...................III-29 c. High-Capacity Transport Between ILEC Wire Centers and Long-Distance Networks..................................................................III-29 d. High-Capacity Transport Between ILEC Wire Centers and Wireless Networks............................................................................III-30 2. High-Capacity Loops...............................................................................III-31 a. Locations Reached by Competitive Fiber .........................................III-31 b. Large Enterprise Customers..............................................................III-32 c. Access to Long-Distance Networks ..................................................III-34 d. Locations Reached by Other Competitive Alternatives....................III-36 APPENDIX A. MASS-MARKET BROADBAND COMPETITION: SEPTEMBER 2004 APPENDIX B. PRICE COMPARISONS APPENDIX C. ADDITIONAL VOIP SERVICES APPENDIX D. CLEC NETWORKS BY MSA APPENDIX E. COMPETITIVE FIBER-BASED COLLOCATION BY MSA APPENDIX F. COMPETITIVE COLLOCATION PROVIDERS IN THE TOP 50 MSAs APPENDIX G. FIXED WIRELESS PROVIDERS BY MSA APPENDIX H. ADDITIONAL SOURCES ii I. COMPETITIVE OVERVIEW Local telecommunications markets are vastly more competitive today than they were in 1996, and very much more competitive than they were at the time of the Triennial Review in 2002. See Table 1. No one can seriously doubt that facilities-based, intermodal competition will continue to grow robustly going forward. In the mass market, the most prescient and effective competitors have turned out to be companies that never bought a single UNE from an ILEC, and that certainly do not need ever to do so. Cable companies now offer circuit-switched telephony to about 15 percent of all U.S. households, and among those households, almost 1 in 5 already subscribe. Far more significantly, however, numerous competitors are now providing low-cost, high-quality voice service to mass-market customers using packet – not circuit – switches. Approximately 90 percent of U.S. households now have access to a broadband connection from a competitive supplier. By the end of 2004, cable companies will be offering voice-over-IP services to nearly a quarter of all U.S. households, and to nearly half by the following year. Other voice-over-IP providers, including established companies like AT&T and upstarts like Vonage, are currently offering voice-over-IP services to even greater numbers. Wireless carriers are aggressively competing for both lines and traffic: since the time of the Triennial Review, the number of wireless lines has grown from 129 million to 161 million, while the number of wireline lines has declined; the percentage of users giving up their landline phones has grown from 3-5 percent to 7-8 percent; and wireless traffic has grown from 16 to 29 percent of all voice traffic and to 43 percent of long-distance traffic. In the provision of high-capacity facilities to enterprise customers, competition has likewise increased since the time of the Triennial Review. In addition, as a result of the D.C. Circuit’s decision in USTA II, the Commission is now required to consider forms of competition that it chose to ignore in the past, such as special access purchased from incumbents, and also is required to take a much broader view of where competition is possible. Under this approach, the evidence shows that competing providers are successfully providing high-capacity services wherever demand for those services exist, by using a combination of their own or other alternative facilities and special access services. Competing providers have deployed an average of nearly 20 networks in each of the top 50 MSAs, and have collocated fiber in at least 55 percent of the wire centers that account for 80 percent of BOC special access revenues. A large and growing number of businesses also are obtaining some of their high-capacity services from cable companies and fixed wireless providers. In addition, competing carriers are using special access to serve business customers of all shapes and sizes. In fact, more than 90 percent of the high-capacity loops that carriers purchase from the Bell companies, which they then use to serve their own customers, are sold as special access as opposed to UNEs. Competition is accordingly thriving in all of the markets in which high-capacity facilities are used. Competing carriers control a third or more of all special access revenues; more than half of the market for large enterprise customers; and approximately three-quarters of the market for high-capacity data services, which now represent the majority of corporate telecom spending. I-1 Table 1. Competitive Developments 1996 1999 2002 2004 LCO URO TRO Broadband % homes with access to cable modem 0 20 71 87 % homes subscribing to cable modem 0 <1 8 15 % homes with access to voice over IP 0 0 0 87 % homes with access to 2-way satellite data 0 0 >90 >90 MSAs with fixed wireless broadband 0 0 58 >70 Wireless % pop. in counties with 3 or more operators n/a 88 94 97 % pop. in counties with 5 or more operators n/a 69 80 88 % pop. subscribing to wireless voice 17 32 45 54 % pop. subscribing to wireless data 0 0 3 10 Wireless subscribers
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