Posted by: AT&T Blog Team on March 29, 2016 at 9:41 am
By Rich Clarke, AT&T Assistant Vice President of Public Policy
BT Americas (BTA) has repeatedly beseeched the Federal Communications Commission (FCC) to revoke its regulatory flexibility granted to DS1 and DS3 special access – and now argues that all U.S. Ethernet services should be similarly regulated if they are to perform as well as those in Europe. Further, BTA often asserts that the performance of its Openreach subsidiary supplying special access services in the UK is far superior to U.S. performance. While BTA’s past claims have been repeatedly refuted by AT&T, its recent Reply Comments introduce a new “study” purchased from European telecom consultancy, WIK. This study argues that Ethernet prices are distinctly higher in the U.S. than in Europe, and that this unhappy state is due a lack of competition and competent regulation in the U.S. A little detective work shows these claims about Ethernet to be as fanciful an overreach as BTA’s prior claims about DS1 and DS3 services.
WIK’s February 2016 report presents two sets of Ethernet price “data.” The first comes from another consultancy, Ovum, and dates from August 2013. WIK uses these Ovum (2013) data to estimate Ethernet prices for the U.S., the UK, France, Germany and the Netherlands. Based on this comparison, BTA and WIK conclude that Ethernet prices are higher in the U.S., and that Ethernet adoption is lagging in the U.S.
When drawing this conclusion, it is unfortunate that BTA and WIK apparently were unaware that on Sept. 28, 2015 Ovum published an update to its 2013 report. Examination of Ovum’s 2015 report reveals major changes in the Ethernet market over the intervening two years. In 2013, Ovum reported U.S. prices for 1G metro Ethernet to be $31,060 per year. Just two years later, this price had dropped by 36% and was $19,879. Declines in U.S. 10G service prices were even greater – dropping by nearly 58% from $61,237 in 2013 to $25,873 in 2015. But even more telling, Ovum’s 2015 report projects that by the 2018-20 period, U.S. prices for 1G and 10G Ethernet service will be no higher (and sometimes significantly cheaper) than the prices from the four European champions that WIK selects as comparators to the entire U.S. Further, over the 2015-20 time period, Ovum (2015) projects that U.S. metro Ethernet lines will grow at a compounded annual rate of 16.9%, while the four-country European growth rate will be only 9.2%. The moral here, if you rely on stale data, expect rotten results.