8.1 Overview | DSL Advances

DSLs operate by transmitting data over copper telephone lines. ^[1] Each line traverses between a customer premises and a telephone company central office (CO) or a digital loop carrier remote terminal (DLC-RT). These facilities are owned by the incumbent local exchange carrier (ILEC, the traditional phone company) and prior to deregulation , the ILEC operated as a regulated monopoly and was not required to make its facilities available to competing service providers such as competitive local exchange carriers (CLECs). Without access to these facilities, competitive local services were not possible. With the 1984 Modified Final Judgement divestiture of AT&T, the telecommunications regulatory climate began its gradual change from a regulated monopoly to a mostly deregulated competitive market. The competitive market was seen as an environment that would accelerate innovation and reduce the price of services. To avoid abuse, the activities of a monopoly are tightly restricted by government regulations that require lengthy public review and approval of every new aspect of service. The regulators operated in the mode of telling the monopoly what it could not do, and there was little incentive for the service provider to reduce the price of services. For the competitive market model to succeed, the CLECs must have access to necessary facilities owned by the ILEC. This access must be provided at a reasonable cost, availability, and reliability. CLECs offer their services via unbundled lines leased from the ILEC. Alternatively, a CLEC may offer ADSL service via line sharing where the ILEC uses the voice frequency band for its regulated telephone service, and the CLEC uses the higher frequencies for its services. During the late 1990's it became apparent that local service competition could be further facilitated by the use of alternative local access media in addition to unbundled telephone lines. The alternative media includes coaxial cable, terrestrial radio, direct satellite links, and fiber owned by the CLEC.

^[1] Industry and regulatory documents use the terms "line" and "loop" to refer to the twisted pair of wires connecting the customer to the network. In this book, we primarily use the term "line."

Despite the business failure of some CLECs, the creation of a competitive telecommunications market has seen some success. There are more than 300 CLECs in the United States providing service to millions of customers. It appears that the ILECs, CLECs, and ISPs (internet service providers) are learning that cooperation with each other is necessary for their mutual benefit. Figure 8.1 shows the types of companies that provide portions of the total service to the end customer. Sometimes more than one of these functions will be provided by one company or by company affiliates .

Figure 8.1. Hierarchy of service providers.

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