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Arizona Telecommunications & Information Council (ATIC)
Multitenant Building Telecommunications Access Study
National Precedents and Trends-- United States Congress

The Evolving Telecommunications Landscape

Telecommunication Markets at the End of the 20th Century

Economists have long acknowledged that competition keeps prices down. The New Economy creates another critical reason for competition: competition drives innovation, and ultimately provides the greatest benefits to consumers and citizens. Of course, government must continue to provide commonsense health, safety, and environmental regulations. However, government should move away from regulating economic competition among firms and instead promote competition to achieve public interest goals of lower costs, new products and greater consumer choice. In the New Economy, technology is not just the province of Silicon Valley; it is the catalyst for profound change throughout the economy and society. Technological innovation has now become central to addressing a wide range of public policy goals, including better health care, environmental protection, a renewed defense base, improved education and training, and reinvented government.
 -- Excerpt from Rules of the Road: Governing Principles for the New Economy from The Progressive Policy Institute's (PPI) Technology and New Economy Project

Recent progress in opening the traditional voice telephony market to competitive providers has proven to be fraught with difficulty and has only advanced in a limited and somewhat erratic manner. But there has simultaneously been significant progress in many other telecom service sectors and hopeful portents abound. While we wish dearly for more expedient regulatory reform, the slow pace of review, decision, and action is to some extent understandable due to the competing jurisdictional entities, as well as sheer complexity of the issues. Are they hindered by rapidly evolving technology advances and market forces, compounded (and confounded) by vested interests, and their continual legal challenges? Certainly. Are we better off than we were five years ago? Undoubtedly, yes!

Bells Labs and its progeny have proved themselves exceedingly capable of providing an ongoing renaissance of copper with its ability to carry increasingly complex and high-bandwidth telecom content streams. Dial-up modems have reached modest data rates (ITU V.90 at up to 33.6 Kbps upstream and 56 Kbps downstream) and have become ubiquitously attached to or incorporate into personal computers (PCs) and information appliances. Internet access is now nearly universally available, with more than 99 percent of American households able to reach an Internet Service Provider (ISP) with an unmetered local telephone call, up from 85 percent in 1996. More than 96 percent of them can choose from four or more ISPs and 85 percent from more than 21 ISPs.

Higher speed Digital Subscriber Line (xDSL) services are becoming increasingly available from ILECs, CLECs, and DLECs alike, especially in urban markets. Lack of standardization, quality of legacy lines, and distance from customer premises to Central Offices (COs) compound the difficulties encountered in the leasing and provisioning of lines, effectively limiting deployment to date. The recent FCC ruling mandating line sharing with sub-loop leasing of the high-frequency portion will further xDSL deployment and use. Consumer acceptance of digital subscriber line is accelerating, rising from just 77,000 customers in early 1999 to between 650,000 and 750,000 at the end of the year, with projections of 2 to 3 million by the end of 2000.

Cable operators have been aggressively upgrading their urban fiber and coaxial wiring and networks, rolling out a broad range of new services, including high-speed broadband data and Internet connectivity, voice telephony, and expanded digital television content and features. Cable modems are being standardized at higher rates (some 27 Mbps under DOCSIS) with new advanced functionality, and will soon be available for direct consumer purchase in retail distribution channels. Though cable television subscription prices have continued to rise, Local Multipoint Distribution Services (LMDS) and Direct Broadcast Satellite (DBS) are providing competitive video services to small dishes and may now add more local content, further strengthening their offerings. DBS delivers to a broad geographic footprint reaching many previously unserved residential consumers. The ILECs are also beginning to extend their fiber systems closer to the consumer so as to better deliver competitive digital video offerings over legacy copper and may in time prove a significant competitor in the video content arena. And the Internet will deliver rich media content streams including multicast and on-demand video.

Adding up to five PCS carriers to the previous two cellular wireless providers has lead to remarkable growth in the adoption of mobile phone instruments, while network coverage continues to expand, and systems go increasingly digital. Airtime rates have plummeted while service plans now offer large blocks of minutes and even single-rate cross-country dialing. Multi-protocol, frequency-agile, data-enabled mobile telephones will soon provide global coverage and roaming. Some consumers are using wireless providers as the carrier of last resort in certain geographic areas or choosing to "cut the cord," substituting wireless for wireline voice services. Low data rates (commonly 10-28 Kbps) for roaming connections will increase to perhaps 384 Kbps or more as Third Generation (3G) systems are implemented, supporting a wide range of mobile information appliances. These new generation portable devices are just now coming to market and will readily support messaging and browsing applications.

Fixed wireless systems of many different configurations are being developed and deployed, currently offering competitive choices for broadband access with aggregated voice traffic to business customers in most metropolitan and some rural areas. The market for broadband wireless services is estimated at some 500,000 access lines in 1999 with expected growth to more than 4.4 million access lines in 2004 (19 percent of the market for all broadband access lines). Additional geostationary and polar orbital satellites, as well as stratospheric platforms, will deliver ubiquitous global connectivity for voice and broadband data traffic to both mobile and fixed locations. Wireless local loop remains in a mostly experimental phase, but offers great promise for unserved and underserved areas, especially rural and tribal lands. However, it will also be increasingly utilized to overlay currently served target markets.

An explosion of long-haul fiber backbone is being deployed in metropolitan rings, across the nation, and around the world. From some 14 Internet backbone providers in 1996, there are more than 43 today with 19 companies having installed more than 200 points of presence each. Advances in fiber optic transmission, such as multi-colored Dense Wave Division Multiplexing (DWDM), continue to increase carrying capacity to 10 Gbps and beyond for individual fibers. Meanwhile, the great convergence of voice, data, and video over Internet Protocol (IP) platforms continues unabated while American ingenuity continually invents new ways to transport and utilize ever-higher bandwidth capabilities and capacities. From only 13 CLECs in 1996, today there are some 333 and all 50 states have at least one competitor. Today's top 35 CLECs have a market capitalization of some $86.4 billion versus 9 publicly traded competitive carriers in 1996 worth $3.1 billion.

As the Internet moves into the 21st Century, it is beginning to undergo a dramatic transformation from a predominantly "narrowband" world of dial-up modems and slow connections, to a high-speed "broadband" world using an emerging array of new technologies. Although today many corporations and educational institutions access the Internet through fast dedicated phone lines, the Internet has become the dynamic and democratic medium that it is through widely-available and competitive dial-up connections provided by thousand of Internet Service Providers around the country.

At least four technologies are emerging as broadband alternatives to the dial-up modems. Operators of cable television systems have undertaken major overhauls of their coax-cable networks to enable the use of high-speed cable modems. Local telephone companies are rolling out the Digital Subscriber Line (DSL) technology that allows the transmission of high-speed digital data over ordinary copper telephone wires. Although less developed than cable modem or DSL service, terrestrial wireless and satellite technologies also offer the potential for high-speed Internet access. A number of legal and policy debates are swirling around the emergence of broadband technologies and the transformation of the Internet to a high-speed medium.

 -- U.S. Congressional Internet Caucus Advisory Committee Broadband Overview

Multitenant Building Telecommunications Access Study
National Precedents and Trends-- United States Congress