Overbuild: The New RBOC Advanced Access Architecture Strategy?

Information Gatekeepers has recognized the Advanced Access Architecture thrusts of the major U.S. carriers as among the most important events in telecommunications history. As such, IGI has been periodically issuing major reports on the FTTP/FTTN activities of the RBOCs since they began in 2003. Earlier this year we issued “Advanced Access Architectures - 2008: AT&T, Verizon, and Qwest Plans and Forecasts,” the most comprehensive of our reports on this subject. In recognition of the wide interest and deep importance of the FTTP/FTTN phenomena, we are now issuing a series of reports that focus on narrower aspects of Advanced Access Architectures. Specifically, this report focuses on the competitive impacts of overbuilding by the RBOCs with AAA. The report is a companion to:

• “Advanced Access Architectures - 2008: AT&T, Verizon, and Qwest Plans and Forecasts” | info
• “Cost Analysis of RBOCs’ Advanced Access Architectures; FTTP, FTTN, FTTC” | info
• “Bandwidth Needs Analysis of the RBOC’s Advanced Access Architectures : FTTP and FTTN” | info
• “FTTP/FTTN: The RBOCs’ Advanced Access Architectures Equipment and Fiber Requirements.” | info
The first report above, “Advanced Access Architectures - 2008 …,” is a very comprehensive report on the subject. The others focus narrowly on particular aspects of the broader area. This report focuses on the strategic impacts of overbuilding.

Perhaps overbuilding started with Abel’s farming intruding on Cain’s hunting territory. It certainly was in full force in the early part of the 20th century when Tesla was overbuilding Edison’s DC distribution facilities with AC power facilities. (Con Ed in New York still had over 4,000 DC customers in the early 1960s.)

“Overbuild” in the context of this report refers to one company building facilities and offering service in another’s franchised territory. Overbuild in the telephone industry, particularly by the large players, has been practically nonexistent since the early days (early 1900s) of the industry. Today, some small, mostly rural telephone companies may overbuild each other, and overbuild has been fairly widely practiced in the cable industry. Some telephone companies have overbuilt cable companies with CATV-type distribution. Also, cable companies using their CATV distribution plant to provide telephone service, as is common now, certainly are overbuilders. However, until now, overbuilding has not been practiced by the large telephone companies in this country in modern times.

With Verizon’s decision in northeast Texas to overbuild not only the existing cable companies, but also AT&T, that has all changed. As has been widely reported, Verizon started in mid-2008 to directly overbuild AT&T franchise areas in North Texas. This activity is based on an approved application with the Texas PUC for 12 Texas cities outside the existing Verizon franchises