August 16, 2000 11:15 AM PDT

Telecom companies stymied by Verizon strike

High-speed Internet access providers and alternative local phone companies have found themselves at the mercy of the striking Verizon Communications technicians, facing unanticipated difficulties in offering new connections in territory from Maine to Virginia.

Competitive telecommunications providers, or CLECs, and digital subscriber line (DSL) access companies say they're keeping busy with work orders that pre-date the Aug. 6 strike, as it progresses into its second week.

For a company such as Covad Communications, the stakes could get high. If the strike doesn't end soon it "could impact our business," said spokeswoman Allyson Willoughby.

Telecom providers such as Covad use lines owned by incumbent carriers such as Verizon. Whenever a new DSL service is provided by Covad, or a telecom reseller establishes a new phone line for a customer, a technician from the carrier that owns the line has to go on site.

"I could see this being a big issue" if the strike progresses much longer, said TeleChoice analyst Adam Guglielmo. It's difficult enough for DSL providers to gain access to Bell infrastructure, he said, noting that Verizon, the former Bell Atlantic, is considered "one of the most difficult."

The issues facing companies that rely on the networks of the Baby Bells underscore the continued reliance companies such as Covad and Rhythms NetConnections have on the entrenched phone companies with regard to their own businesses.

"All orders for new or additional services will be deferred" until the strike is resolved, said Verizon spokesman Steve Marcus. Currently, 30,000 managers from Verizon's Bell Atlantic territory are working 12-hour shifts to replace the striking technicians, he said, but their priority is service interruptions.

Guglielmo said he doesn't expect Verizon's position to change on new services. "Their highest priority is not DSL," he said.

Talks between Verizon, the Communications Workers of America and the International Brotherhood of Electrical Workers unions continued today, but no progress was made.

Competitors continue to take orders for new services. A customer service representative for telecom reseller OnePoint Communications said that while an order could be taken immediately, customers couldn't be given an installation date until after the Verizon strike was resolved. Covad also continues to take installation orders.

"We haven't seen any change" in the company's install rate, Covad's Willoughby said, as the company continues to stay busy completing installations scheduled before the strike. She said Covad is watching the strike "very closely" and is in daily contact with both Verizon management and Covad's Internet service provider partners.

see story: Verizon who? Covad has a history of difficulty with Verizon and last year filed an antitrust suit against Bell Atlantic, citing difficulty in connecting to the telco's plant.

Other DSL providers, such as Rhythms and NorthPoint Communications, said that the strike had yet to have a major effect, although that could change if it were prolonged. CompTel, a Washington-based association that represents telecom resellers, hasn't received any complaints from its members regarding the strike, said spokeswoman Kathleen Franklin. The association is watching the strike closely, however.

FCC ruling's effect
A November ruling by the Federal Communications Commission could make future strikes against incumbent telecom companies less of a burden to competitors.

Under the Advanced Service Third Report and Order from the FCC, local telecom companies have to share their lines with other high-speed Internet providers. That technology is used by incumbents such as Verizon, pairing DSL and voice on a single line, but hasn't been available to competitors.

Only about 10 percent of the nation's approximately 1,700 central offices have been converted to line sharing, meaning the ruling is unlikely to be of benefit during the Verizon strike. Willoughby said that 70 percent of central offices are expected to be converted by the fourth quarter, and all should offer line sharing in the first quarter of 2001.

One benefit of line sharing is that consumers don't have to purchase a second phone line to use a competing DSL provider. However, should that consumer wish to contract for a first or second phone line from a competitive reseller, they would still need the assistance of an incumbent technician, so line sharing wouldn't benefit CLECs.

Striking Bell employees don't pose a concern to facilities-based telecom competitors, but statistics from the FCC and trade associations suggest that few competitors own their own facilities. One exception to that is the cable industry, which hopes to use its existing lines in consumer homes to provide telephone service.

"Clearly the strike will have an impact" on competitors if it drags out for 30 or 60 days, said Meta Group analyst David Willis. DSL providers shouldn't expect much assistance during the strike, he said, as "Verizon will concentrate on what puts the most money in Verizon's pocket."

Still, he expected a resolution to the strike "in the next couple of weeks."

Willis noted that Verizon soon will add about half of NorthPoint's employees to handle its DSL provisioning as part of Verizon's recent deal with that company, but those employees won't be added to the union.

 

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