IP Convergence: Beyond VoIP, Beyond Cost Savings

The law firms of Kelley Drye (link to the petition) and  Bingham McCutchen (link to the petition), on behalf of several CLECs, have separately petitioned the FCC to modify the rules governing the retirement of copper loop plant by the Bell Companies. 

While these petitions raise an important issue, the relief they seek is all too typical of the Communications bar – more rules.  The concern raised by the CLECs is that the Bell Companies are retiring their copper loop plant in order to eliminate a potential “third wire” into the home.  That is a valid point.  But there is an additional point to be made and a better solution. 

The copper loop plant owned by the Bell Companies has both an intrinsic value as a raw commodity and a potential value as a third wire into the home.  As a commodity, the copper plant is quite valuable since copper is trading at or near all-time highs.  As a third wire into the home, the copper plant is also quite valuable as it can serve as the medium upon which broadband Internet access and IPTV can ride. 

So should the Bell Companies be able to retire their copper plant without any salvage value?  Wouldn’t that run counter to their duty to rate payers and shareholders?   The CLECs should be asking the FCC to require the Bell Companies to either (1) sell the copper loop plant on the commodities market and share the proceeds with ratepayers (who did after all pay for the plant to begin with) or (2) sell the copper loop plant to CLECs as an on-going operation and share the proceeds with ratepayers. 

Now I don’t necessarily favor the first option as I think that would be a waste and I recognize the second option is complex, but carriers around the world are looking at divestiture of their local loop plant and Bear Stearns certainly seems to think it is a good idea.  So instead of asking for more rules surrounding the Bell Companies’ retirement of copper loop plant, the CLECs should be asking the FCC to explore ways the Bell Companies can maximize the value of their copper loop plant not only for their own benefit, but the benefit of ratepayers and the public as well. 

After all, didn’t the CLECs learn from unbundling that you can’t force the Bell Companies to do well something they don’t want to do at all?  Is the best way for competitors to gain access to copper loops to have the FCC establish a host of rules and regulations that force the Bell Companies to do something they don’t want to?  Hardly.  The only way CLECs are going to get meaningful access to the copper loop plant is to buy it themselves.  The proceeds from the sale can be shared with ratepayers and the Bell Companies can use their share of the proceeds to fund their fiber deployment.  Talk about a win-win-win situation.  Ratepayers get a refund, the Bell Companies get a capital infusion, and CLECs get copper loop plant.  That’s a lot better than the Communications bar getting rich off of a series of rulemakings and litigations.