Should SBC have to sell lines to MCI and AT&T for a loss?

[Slowfaller 0]

Basically it's the company I work for, SBC, by law must sell phone lines to MCI and AT&T. The problem is that the lines cost SBC more to maintain then it does for MCI or AT&T to buy them. Check this article out http://www.nbc5.com/news/2186223/detail.html and vote...

Now I'm not a spokesman for SBC or anything so chances are I'm not going to have answers for the tough questions....I'd just hate to see people lose their jobs. Especially me. ( kind of doubt I'd lose my job because of the department I'm in, but I am in Illinois)

Chris

--"Someday you will die and somehow somethings going to steal your carbon" -MM

[jdhill 0]

IF SBC can PROVE that they loose money in these deals then, yes they should be able to raise those rate. Having said that, the other companies should have to eat the cost since they are already screwing everyone... I guess that is why most of the industry is still regulated.

Josh

All that is necessary for the triumph of evil is that good men do nothing. - Edmund Burke

[BoobieCootie 0]

Can't SBC lease MCI & AT&T the lines instead?

[Gawain 0]

Get in line. I work for Verizon and it's the same there too. Remember this is a sector that VZ and SBC readily forecast as "shrinkage" (as much as -2%). SBC still managed $44B in 2002 and VZ at $68B.

This is a LEASE ISSUE. For the uninitiated, in the Telecom Act of 1996, it was mandated that the Incumbent Local Exchange Carriers (ILEC) open their facilities to co-location and competition to "Competitive" Local Exchange Carriers (CLEC). Many of you may know of these CLECs (a lot of cable companies are doing this and a lot of CLECs have gone out of business).

Originally, the act required that leasing of these facilities be done at a discount and many of these CLECs bought bundled services in the process and resold them to consumers and businesses as simple "all in one" packages. MCI's "Neighborhood" is one example.

AT&T is trying to break back into the local dial-tone market as is MCI. These two companies have been instrumental in having the FCC adopt a policy of forcing the ILECs to sell "unbundled network elements" (UNE) to CLECs like AT&T and MCI at a greater discount or loss.

This is based on the local tariffs that VZ and SBC have filed with various state PUCs. Adjusting these rates is very difficult and wholesale does not translate to retail/consumer with any ease.

The spirit of this regulation was to allow the CLECs to operate while investing in building out their own facilities, that never happened and most of them still went ouf of business or cut back operations severely (Teligent is one example). MCI and AT&T are not likely to build out their own facilities either, MCI is in Chapter 11 (this is WorldCom rebranding itself) and AT&T isn't the cash-cow it once was, still plagued by poor business decisions regarding broadband investments, deregulation and divestiture.

I, for one, do not support the CLECs, not because I work for the competition, but because they do not follow their business plan (if they have one) and the market is saturated. The ILECs do pretty well when it comes down to running the operations in the face of shrinking revenues. This does have an effect on jobs and capital investment though, and the lawmakers better remember that. $17B of investment from an ILEC goes a lot further than a few hundred million of VC money sucking on an ILEC tit.

This was long, so it's not my $.02, rather, my $2..

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[mattb 0]

Perhaps SBC is paying too much to maintain the lines?

Everytime I've had to deal with them it's taken multiple visits from a union (read expensive) employee to come and solve a simple issue due to somebody's incompetence. Either the work order wasn't right, they lineman came too late to have access to the basement of the apartment that he needed, etc. etc. An old friend worked for SBC in college - his stories of waste, laziness, and incompetence rival that of a DMV employee.

Business 101 - If you can't raise prices, cut costs.