The nation's transition to IP technology holds great promise for consumers and carriers. Indeed, competitive carriers have been at the forefront of introducing IP-based services to consumers, and many of our members' networks already are all IP. Discussions on the best policies to support a successful transition of the industry to IP, one where competition flourishes and consumers are protected, should be based on hard data that is accurately portrayed, analyzed and supported. Unfortunately, much of the analysis underlying the core claims of the IIA white paper fail to meet such a standard. We have identified five critical flaws in the IIA Paper:
1.The claim that ILECs are continuing to make significant investment in legacy (time-division multiplexing, or TDM) networks is not supported by the underlying data.
The IIA paper claims that there is significant ongoing investment in "legacy" facilities by incumbent local telephone companies, alleging that such behavior is forced by unnecessary regulation. The underlying basis to this claim is a daisy-chain citation through a 2011 paper to a 2008 marketing report. However, these source documents reached fundamentally the opposite conclusion of what the IIA paper asserts - that significant investment in obsolete facilities is occurring. The 2008 marketing report noted that (even more than five years ago) "broadband remains the primary capex driver;" that "there has been a pronounced shift in capex towards new, broadband platforms, and away from narrowband systems;" and that RBOC budgets have "a focus on key projects, such as broadband (FTTx, xDSL), Internet data and wireless backhaul." Additionally, the 2011 analysis stated that "much of the capex is for general-purpose digital networks that can carry voice, data and video."
It is impossible to understand how the IIA paper can assert that ILECs are continuing to make significant investments in obsolete facilities when the source documents recognize that the ILECs are, in fact, upgrading their networks with new technology.
Moreover, the IIA paper completely ignores that the physical layer, which is comprised of costly network components - such as conduits and poles, as well as fiber and copper transmission links, are used (and shared) by both IP and TDM technologies. Consequently, it is not unusual for capex to be expended on facilities that are capable of supporting IP or TDM services. Indeed, the paper seems unaware that IP can be provided over TDM links, and that TDM-like services can be provided over IP, which may partially explain the paper's confusion with the fact that capex expended on investments capable of supporting both new and legacy services is not capex wasted on obsolete facilities.
2.The claim that ILECs are being forced to waste capital and operating funds on obsolete networks by "monopoly era" regulation is not supported by any analysis.
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