Covad Communications Group Inc. on Thursday announced striking a commercial agreement that will allow it to share the local phone network of SBC Communications Inc. at current rates for the next year.
Covad provides high-speed Internet access to many customers by sharing lines with San Antonio, Texas-based SBC and other large regional phone companies. Covad has begun striking commercial agreements with the biggest local phone companies to share their networks.
FCC rules allowing broadband providers to acquire new customers by sharing local phone networks at regulated rates are set to expire next month. Current customers are covered under a grandfather clause. That means the prices Covad pays the local phone companies cannot rise for those existing lines, according to Santa Clara, Calif.-based Covad.
The rules scheduled to expire specifically affect regulated access to part of the local loops owned by the four regional Bells: BellSouth Corp., Qwest Communications International Inc., SBC and Verizon Communications Inc.
Covad and other broadband providers could be required to pay the local phone companies two to three times more than current rates for access to the local phone networks to support new customers if they are required to lease an entire loop at regulated rates, according to at least one estimate. They could possibly cut a better deal under a commercial agreement.
Although the FCC voted last year to phase out the line-sharing requirements, the majority of commissioners have supported the rules. Competitors are hoping the commission will reinstate the rules when it issues permanent regulations governing wholesale access to the biggest local phone networks.
The Association for Local Telecommunications Services and some of its member companies have asked the FCC to halt the date the line-sharing rules are set to expire, preserving the requirements until at least the commission releases final regulations controlling wholesale access to the biggest local phone networks. The FCC is not expected to release so-called UNE rules until December at the earliest, at which time the commission also may issue line-sharing provisions.
"... I would ask you to reconsider your vote to eliminate line-sharing for competitors," FCC Chairman Michael Powell wrote in a memo this summer to commissioners Jonathan Adelstein and Michael Copps. "I feel strongly that line-sharing was a pro-competitive measure that promoted facilities-based alternatives for broadband competition."
The SBC agreement allows Covad to continue sharing lines throughout SBC’s 13-state territory at a $5.75 monthly recurring charge and a $10 non-recurring charge per customer through Sept. 1, 2005. Covad and SBC, the second largest local phone company, previously struck a commercial agreement to support line sharing, which stemmed from an antitrust settlement.
Thursday’s announcement marks the second commercial agreement Covad has struck this year with a local phone company to support line sharing. In April, Covad entered a three-year commercial agreement with Qwest Communications International Inc., securing access to line sharing in Qwest’s 14-state region, which stretches from Minnesota to Washington.
Covad has yet to enter similar agreements with Atlanta-based BellSouth, the third largest local phone company, and New York-based Verizon, the largest local phone company.
However, Covad says the agreements with SBC and Qwest represent approximately 60 percent of its customer base supported through line sharing. Covad uses line sharing for all ADSL services except for its new dedicated loop ADSL offer, which is now available through Speakeasy Inc. Covad plans to offer a dedicated loop ADSL service through its direct channel later this year.
