[1st-mile-nm] Fwd: RE: Google Policy Blog: Local Fiber Networks

[Richard Lowenberg]

----- Forwarded message from BHarris at nmag.gov -----
    Date: Thu, 24 Jul 2008 16:39:50 -0600
    From: "Harris, Brian, WEU NMAGO" <BHarris at nmag.gov>
 Subject: RE: [1st-mile-nm] Google Policy Blog: Local Fiber Networks

While I think individually owned fiber has a surface appeal, I think
over time you'd find that it doesn't work very well.  Thre is another
alternative to either the "carrier centric" model of basic
infrastructure or the individually owned fiber link model.

Brian Harris

For your reading pleasure:

------------------------------------------------------------------------

"Gartner Says Carrier Challenges Abound as 'Structural Separation' Looms
Large.

Regulators Poised to Break Up Carriers' Vertically Integrated Business
Model to Encourage Competition and Stimulate Investment

STAMFORD, Conn., May 15, 2008 -

In the next five years the telecom market will change so dramatically
and rapidly that government intervention and market engineering will be
inevitable in some countries, according to Gartner Inc. At the center of
this is the global trend toward telecom "structural separation," which
Gartner defines as the deconstruction or breaking apart of a telecom
carrier's vertically integrated business model into a more horizontally
structured model.

"In the past 20 years, carriers have increasingly focused on operational
efficiency - via a tighter coupling of business assets (vertical
integration) - to compete more effectively against new market entrants
with lower cost structures," said Alex Winogradoff, research vice
president at Gartner. "Despite government moves (such as unbundling and
accounting separation) to encourage competition and stimulate
investment, progress has been meager in most countries. Regulators
believe that continued vertical integration is the primary reason for
this lack of progress and are increasingly seeking separation as a
policy tool."

Gartner said that telecom regulators have been pursuing accounting
separation and are now considering functional and ownership separation
as a last measure to achieve their policy goals. The difference between
these types of separation is the level of control that carriers will be
able to exercise over their separated units:

     *

      Accounting separation means the keeping of separate revenue and
cost accounts for different activities to achieve a detailed and
accurate statement of the costs incurred and profits made by an operator
for a specific activity.

    * Functional separation means the establishment of operationally
fully separated entities, the ownership of which remains with the parent
company. The separate entities have separate accounts, but they are not
legally independent entities.

    * Ownership separation means that a carrier division with some of
the network or the entire network is placed in a separate legal entity
and owned by a company other than the parent company. The term
structural separation is often used in this more fully separated
context.

Mr. Winogradoff explained that not all separation scenarios will fit
neatly into these variants, and regulators in different regions and
countries may have different definitions driven by their individual laws
and telecom policies. However, he said that functional and ownership
separation are global trends and will particularly impact developed
countries where the telecom market is mature and regulators are trying
to inject more direct market competition as a stimulus for innovation
and greater investment in next-generation broadband.

Gartner found that functional separation is being considered by
regulators in most developed countries in Western Europe and Asia, where
it could strongly compromise cost efficiencies currently enjoyed by
vertically integrated carriers. Furthermore, experience in the past 20
years in the United States and Japan has demonstrated that this kind of
forced separation of incumbent carriers has an overall negative effect
on them.

In Europe, it is still too early to tell whether functional or ownership
separation has had a negative or positive effect on network investment
by BT and other carriers that have pursued separation. All national
regulatory authorities and European Union regulators are watching this
issue carefully. Experience of separation in other industries - for
example, electric utilities and railways - has shown that customer
experience and service quality are often negatively affected.

"All incumbent carriers that have global ambitions should consider two
distinct strategies to deal with forced structural separation: First,
focus on defending their incumbent franchise; and second, take advantage
of strategic positioning opportunities in foreign countries where
structural separation of the incumbent is being considered," Mr.
Winogradoff said.

Additional information is available in the Gartner report "Dataquest
Insight: Telecom 'Structural Separation' Is a Global Trend." The report
is available on Gartner's Web site at"

http://www.gartner.com/DisplayDocument?ref=g_search&id=656008&subref=sim
plesearch.

Contact:
Christy Pettey
Gartner
+1 408 468 8312
christy.pettey at gartner.com


-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com

----------------------------------------------------------------
This message was sent using IMP, the Internet Messaging Program.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://www2.dcn.org/pipermail/1st-mile-nm/attachments/20080725/263a35eb/attachment.html>