XO Communications CEO Carl J. Grivner testified before Congress, and labeled AT&T, Qwest, and Verizon a “copper cartel” that practices anti-competitive and anti-consumer tactics. Grivner testified before the U.S. House Telecommunications Subcommittee on Telecommunications and the Internet, stating that the “…competitive [telecom] industry has been a major source of billions of dollars in investment for broadband deployment and innovation. But we continually face incumbents’ efforts to restrict access to essential last mile links that are critical to competitive broadband offerings.” Grivner raised alarm about the “cartel’s” increasing tactic of removing or cutting copper lines to customer premises, a practice which Verizon has been accused of when converting customers to FiOS. Grivner also ridiculed the “cartel” for trying to duck competitive obligations through the use of the Telecom Act forbearance statute to “end-run pro-competitive wholesale pricing rules for last mile connections.”
Grivner has reason to be concerned. The traditional CLEC who relies on leased capacity from incumbents, can at times, seem like an “endangered species.” CLEC line counts, on average, are in decline, and the incumbents are leveraging their market dominance like never before. The competitive “mojo” has shifted to the cable industry, which owns their own last mile broadband network. Upstarts in the wireless industry including DigitalBridge and Open Range also hope to take up the competitive slack. While these cable and wireless alternatives are initially focusing on residential services, they too hope to capitalize on the lucrative SMB and enterprise market – the specialty of companies like XO. These “new” competitors can’t join the “copper cartel,” but they are adding even more competitive pressure to an already challenging scenario for XO and their CLEC brethren.