In February 1996, the Clinton Administration signed into law the Telecom Act of 1996. This act was the culmination of several years of trying to deregulate and provide a competitive marketplace in the telecommunications arena. This law, when enacted, opened the door to an open communications infrastructure. Essentially, what the administration put into play was the beginnings of the concept of the information superhighway.
The Telecommunications Act of 1996 opens the way for a myriad of new players to compete for the local dial tone service. In the United States, dial tone amounts to a $115 billion a year industry. No wonder all the emerging players want a piece of that action. What this means, however, is that a group of new players will emerge to provide dial tone services while the local telephone companies are unshackled and allowed to penetrate new markets that were unavailable to them in the past.
During the beginning stages of this Telecom Act, elation and overwhelming support for the newly emerging marketplace from all new telecommunication players was the name of the game. However, as one would expect, things don’t work as smoothly as they are supposed to when first starting. The Telecom Act of 1996 allows for the long-distance companies (IECs) to enter into new business opportunities. These include dial tone, cable TV services, high-speed Internet access, and two-way video communications capabilities after the infrastructure is in place.
TV Cable Companies
The cable TV companies, on the other hand, are now allowed to enter into telephony and other forms of the communications business. These providers are allowed to offer voice communications, high-speed Internet access, two-way multimedia communications, and cable TV services, all on a single communications platform. As the cable companies look at their infrastructure, they already have a high-speed communications channel running either to or by everybody’s door. However, they must recognize that in the past their primary service was the delivery of one-way communications in the form of cable services. In order to provide high-speed Internet access and enhanced capabilities as well as voice communications, these companies were forced to create a two-way communications cable system. This means that they had to either add new cables or provide high-speed fiber in the backbone network to the curb and then coax to the door. Although this sounds fairly straightforward and easy, it does require significant investments on the part of the cable companies. This alternative proved very effective with a hybrid fiber/coax arrangement that, by the end of 1999, the cable TV companies implemented in several cities in the United States and Canada to provide the high-speed access in a bundled pricing mechanism. Moreover, 1999 marked the year when AT&T (the now-streamlined carrier) acquired two of the largest CATV companies, TCI and Media One.
Internet Connection
As the Telecommunications Act continues to be enforced, the telephone companies will break out into new markets such as operating long-distance service for less and providing cable TV services, Internet access, and videoconferencing capabilities on their local infrastructure. What the telcos have to realize, however, is that the local two-wire cable facility (called the local loop) is a single pair of copper wires that was not designed to sustain the high-speed communications we’re talking about here. Therefore the telcos will continue to update their cable infrastructures. These companies are enamored with the new xDSL technologies that use high-speed digital subscriber links. Using various techniques such as asymmetrical digital subscriber link (ADSL) or very high-speed digital subscriber link (VDSL), the telephone companies can provide high-speed communications to the customer’s door. In the ADSL marketplace they envision delivering up to 9 Mbps to a customer’s door, whereas outbound from the customer to the network the service will offer plain old telephone service (POTS) and up to 384 Kbps data transmission. Two occurrences have deviated from this scenario to start:
1. Rate-adaptive ADSL (RADSL) was introduced allowing the telco to deliver less than the 9 Mbps downloadable to the door. Instead, they use a figure of 1.544 Mbps downloadable and adaptive rates of 256 to. 1.024 Mbps uploadable. If the network is busy then the consumer will get slower-speed access, but a contracted minimum comes into play. However, if the network is lightly loaded, the consumer will benefit from the higher throughputs.
2. One-meg modems were developed. The ADSL Forum looked at the application and need for the speeds mentioned above. What this forum determined, in the short term, is that the average consumer only really needs 1 Mbps downloadable and approximately 160 Kbps unloadable asymmetrical speeds. Therefore, they developed what was termed ADSL Lite or G.lite specification. Over time, this specification will allow higher-speed access, but for the short term this is sufficient.
In the ADSL marketplace the telcos have been dragging their feet implementing these services. There are many reasons, but the most common is that they do not want to be forced to provide the xDSL service at a discounted rate, like they do the dial tone. Additionally, there is much ado over the standards being implemented in xDSL technology.
In the VDSL marketplace, the telcos envision up to 51 Mbps to the customer’s door with a much lower-speed communications channel outbound, or a symmetrical 51 Mbps in each direction. Regardless of the technique used, the telephone companies are in a position to find technologies that will support and sustain these speeds on their local, single twisted pair of wires to the customer’s door. This is their challenge. Beyond the high-speed communications, the telephone companies can also enter into manufacturing, long distance, and cable TV service. However, the caveat of the Telecom Act of 1996 is that these companies must first prove that an open competitive environment exists at the local loop. There has been much ado in terms of the Telephone Companies being willing and cooperative in providing this access. One can imagine that for the next few years this will be one of the contention points as the newer players emerge and attempt to get into either facilities-based or a non-facilities-based dial tone provision.
