CLECs and RBOCs living together...

Just when we thought that Covad had reinvented itself as the line-splitting service provider, it's back in the line-sharing game. Last week the company negotiated a deal with Qwest Communications to allow Covad to usurp the digital signal on Qwest's copper lines, the first such deal since the FCC eliminated the line-sharing mandate in the Triennial Review. (See story in Top News.) FCC Chairman Michael Powell even heralded the agreement as a great moment in competitor-incumbent relations, replete with all of the warm snuggly goodness of greeting card depictions of puppies and kittens embracing one another.

Well, don't expect it to last. While Covad and Qwest coming to terms is a healthy example of cooperation between disparate providers, it's also, in all likelihood, a very unique example. I don't really foresee any of the other RBOCs lining up to follow Qwest's lead.

It's unlikely that the Bells would be very willing to reintroduce of their own accord one of the more despised elements of the unbundled network element platform, even if they get to negotiate their own rates instead of letting the government set them. The RBOCs already have to contend with the IXCs beating them at their own bundling game by selling DSL through line-splitting agreements. Allowing Covad to wholesale DSL out from under voice would add another set of headaches.

So why is Qwest the exception? Well, it's in a bit of a different situation than the other RBOCs. It's way behind in DSL sales, meaning it doesn't have an advantage to lose. Any sale of the digital loop is probably a bonus in its book, especially if it negotiated lucrative line-sharing rates with Covad. Right now, Qwest is charging $25 a month for a bare data connection, sans ISP services. Just turning over the line to another carrier for a little less money isn't that outworldly a concept. Secondly, Qwest remains the sole RBOC to entertain the idea of an unbundling data from voice. While the other RBOCs are trying to pack as many services onto one bill as possible, Qwest has actually begun offering its DSL naked, allowing customers to go elsewhere for voice service or eschew it altogether.

Oddly, this might all fit in with Qwest's VoIP plans. By offering DSL naked, it can offer IP telephony over its own copper lines. Perhaps Qwest reasons it can offer VoIP over its own lines through a broadband service offered by Covad. Stranger things have happened in this industry.

Contact me at kfitchard@primediabusiness.com