The endurance tests

By now the U.S. should have been leading a revolution in global communications. With its collective technological know-how, filthy-rich entrepreneurs and unprecedented ability to impose its cultural will, the U.S. and its telecom troubadours should have already danced across the oceans singing songs of open access and universal broadband.

But five years after the modern rendition of the Telecom Act, they are still singing the Section 271 blues. The revolution continues to plod along step by step, state by state and interface by interface, with a testing process that has given new meaning to bureaucracy.

Six down, 44 to go States where carriers have filed Section 271 applications for approval to provide long-distance service

There have been efforts to pry open the operations support systems (OSSs) within incumbent local exchange carriers' (ILECs') networks and allow competitors unfettered access to the unbundled network elements within — in turn allowing incumbents into the long-distance business. To that end, the FCC, state public utility commissions (PUCs) and competitive, incumbent and interexchange carriers (IXCs) began to conduct independent, third-party evaluations of the ILEC systems as early as mid-1999.

That some of these evaluations still are in progress is testament to either the complexity of these OSS interfaces, the fastidiousness of the regulatory bodies or the power of the long-distance companies that aim to impede the process and thus delay the erosion of their market share. Or it could be that the once-coveted prize of offering long-distance service is not as appealing.

Either way, the FCC to date has only granted approval for incumbent carriers to enter the long-distance market in six states (see figure). However, carriers have only applied in 11 states. Why? Because they are still testing.

Qwest Communications took a new approach by agreeing to a region-wide test of its OSSs. The actual tests began April 10, 2001, in 13 of the 14 states in Qwest's region; Arizona is conducting independent tests. In addition to testing — and the months of preparation for it — Qwest participated in joint workshops to address the needs of competitors and resolve conflicts.

“Third-party testing is an inordinately expensive and cumbersome process that is hard to find in the Telecommunications Act,” said Steve Davis, senior vice president of policy and law for Qwest.

The company had hoped to complete its tests in April and file for long-distance approval by the end of this summer. Qwest is aiming to finish in the fourth quarter.

KPMG Consulting acted as test administrator for Qwest's regional test. Hewlett-Packard Consulting played the role of competitive carrier, and The Liberty Consulting Team audited the process.

Davis called the tests a delay tactic used primarily by IXCs to thwart applications to enter the long-distance market. “If we could go in right now and show our performance for serving CLEC customers… and our compliance with the [FCC's] checklist items, that would speed the process more than going through third-party testing,” he said.

It is difficult to say whether the interconnection tests have proved successful or even necessary. But there is an upside. “The process has benefits, I won't deny that,” Davis said. “It helps you educate your CLEC customers better on how to send orders through without having them delayed.”

The competitive landscape could change quickly if Qwest sends the dozen applications to the FCC it expects to by year's end. And the required interconnection tests may be seen in a different light as more carriers' networks are declared open and they enter the long-distance market.

Despite the arguable success of the open access process in the U.S., experts recommend the third-party testing process to the European Union. In a report to the European Commission on unbundled access in March 2000 — just before the broadband bubble burst in the U.S. — the Office of the U.S. Trade Representative (USTR) urged the use of third-party interconnection testing, saying that incumbent carriers have a natural incentive to resist providing unbundled access to local loops and to discriminate against competitors.

“If these natural incentives are not addressed, incumbent operators could not only thwart the development of local competition but delay the deployment of broadband services to consumers,” the USTR report read.

The USTR also strongly recommended the establishment of OSS technical standards and the development of automated OSS interfaces. “Without such a testing requirement, a competitor… may find its customer's service disrupted or that it is unable to provide the promised xDSL service.”

So much for the revolution.

Whether the EU (which imposes mandates on its members) or the members themselves (which tend to interpret those mandates differently) require third-party testing, all seem to agree with the last point made by the USTR.

“For an other licensed operator [OLO] to get into the DSL market, they need to do it at volumes that will give them a return on their investment. So far the incumbents have not been prepared to accept those orders in the volumes the OLOs need. So rather than go out there with a $2 million ad campaign to launch a service they can't provision, [incumbents] are delaying their offerings,” said Phillip Gamble, Telcordia's director of interconnect solutions for Europe.

Although European carriers lack the incentive of offering long-distance service, other things have encouraged them to submit to third-party testing of their OSSs.

“Several [European] incumbents have been criticized by regulators for not moving fast enough in opening their networks and their stock dropped 10% in one day,” Gamble said. “They are seeing a definite link between stock price and openness.”

Like the FCC, the EU has the right to levy fines. The EU later this year will conduct a review in various countries on each carrier's compliance with the Competition Act of 1998.

Telcordia has not announced whether it will attempt to get into the interconnection testing game in Europe, if there is one. However, the company has publicly stated that the need for centralized control of interconnection is even more important in Europe than in the U.S.

“It makes a stronger case here [in Europe] where you are dealing with greater differences among the countries and greater differences among the types of services being offered,” Gamble said.

The same case can be made for Telcordia's Exchange Link interconnection clearinghouse, which acts as a central interconnection gateway between competitive and incumbent carriers in the U.S. Although the clearinghouse has seen some success in the U.S., Telcordia has yet to announce a launch date in Europe.

KPMG Consulting makes a case for third-party interconnection testing that could apply to Europe as well as the U.S. In a report aimed at U.S. regulatory bodies considering Section 271 testing, KPMG wrote, “The greatest benefits of testing lie in its fact-based, repeatable methodology, the open communication it fosters between RBOCs and CLECs and the insight gained by regulatory authorities into an RBOC's operations.”

The report also said that testing “helps strip away the ‘he-said, she-said’ problems common to 271 proceedings involving CLECs and RBOCs, by replacing allegations with unbiased evidence.”

The problems will be no different for European carriers, but so far carriers abroad have relied on the buddy system for testing interconnection and have adopted a wait-and-see approach.

“We have looked at experiences not just from the U.S. but from other countries where unbundling is in process and applied that experience as we can,” said a representative from Oftel, the national regulatory body in the U.K. “While this has helped in some instances, in others such as co-location space, no country seems to have found a perfect answer.”

Six down, 44 to go States where carriers have filed Section 271 applications for approval to provide long-distance service
State	Provider	Application date	Status
Pennsylvania	Verizon	6/21/01	Pending
Connecticut	Verizon	4/23/01	Approved
Massachusetts	Verizon	9/22/00	Rejected
Massachusetts*	Verizon	1/16/01	Approved
New York	Verizon	10/01/99	Approved
Missouri	SBC	4/04/01	Pending
Kansas/Oklahoma*	SBC	10/26/00	Approved
Oklahoma	SBC	6/13/97	Rejected
Texas	SBC	1/10/00	Approved
Louisiana	BellSouth	8/06/98	Approved
South Carolina	BellSouth	1/05/98	Pending
Michigan	Ameritech	8/12/97	Rejected
* Resubmitted Source: FCC return to top