Ten Reasons Why OSS Interconnection Will Happen

There are many reasons why ILEC-CLEC OSS interconnection isn't happening today (see Billing World November 1998), but here are ten reasons why it eventually will.

1. Lost RBOC Market Share
RBOC senior management has a mindset that if they lose a customer to a resale CLEC they can easily win the customer back when they are allowed entry into long distance and I believe they are right. But when a customer is lost to a facilities-based CLEC, the RBOC has, for all practical purposes, lost that customer for good. For example, examine what MCI WorldCom has to offer a customer today with facilities-based local competition:

(A) Integrated Local/Long Distance Broadband Networking. One-stop shopping over one access fiber pipe for telephony, Internet access, private networking and more.

(B) Connectivity to 50,000 Office Buildings. Today MCI WorldCom is located in roughly 50,000 office buildings in the United States and another 10,000 in Europe. Customers will see integrated local and long distance broadband service not only at their location, but in all probability at hundreds of other corporate locations as well.

(C) Unknown Friends and Family. Convincing businesses to sign up for a corporate version of residential "friends and family" won't work, and in fact didn't work when MCI tried it. However, if MCI offers businesses a discount when calling other companies that use MCI WorldCom's facilities-based access and the customer doesn't have to do anything else, then that's a pretty good deal.

Trying to recapture a customer lost to a facilities-based local competition will get tougher as time passes. Eventually, RBOC senior management will wake up to the fact that they will never be major players in the national or multinational business market until they get into long distance. They will have to interconnect to make this happen, and the window of opportunity is closing fast.

In fact, it will take only one RBOC to break ranks and open its OSSs for CLEC competition so it can get into long distance; then they will all do the same.

2. Here Comes Bell Atlantic North
Speaking of an RBOC ready to break ranks and open up its OSSs for CLEC interconnection, how about Bell Atlantic North in New York? Here's the deal. The FCC must take into account, under the Telecom Act of 1996, the Department of Justice's recommendation on RBOC long distance entry. The DOJ has tentatively approved Bell Atlantic's entry into long distance in New York if they, in short, open up their OSSs to interconnection. The New York PSC has brought in the consulting firm of KMPG Peat Marwick to make sure Bell Atlantic's OSS interconnection meets the spirit of what Congress and the FCC require of the RBOCs.

Why is Bell Atlantic North leading the pack on OSS interconnection? They have and are continuing to lose ground to the CLECs. There are more than 400 certified CLECs in New York state, and Bell Atlantic has lost more than 50 percent of the T-1 access business in mid-to-lower Manhattan. The state PSC is not going to approve Bell Atlantic North's long distance application until it provides workable OSS interconnection with the CLECs.

3. LNP for Disaster Avoidance
Today the only reason a business customer, excluding ISPs, would be interested in Local Number Portability (LNP) is disaster avoidance. For example, I would want half my switched voice traffic completed via my tried and true ILEC and the other half by a CLEC that was handling my disaster avoidance management. If one carrier goes down I'm not out of business. Or alternatively, I now have clout when negotiating with the ILEC, because there's real competition.

The reasons business customers aren't being hounded by CLEC sales people offering LNP disaster avoidance are many (see Billing World, July-August 1998). Here are a few reasons for starters: (A) regulators haven't gotten around to mandating split-call completion yet, (B) the business processes of CLEC-to-ILEC number porting is a mess (e.g., 25 fax pages to port a line and number), and (C) big CLEC IXCs are not pursuing LNP right now, in order to slow down the RBOC entry into long distance.

Eventually the regulators are going to knock ILEC heads together and get Lockheed or whomever to enter the computer code into the national and local LNP OSSs that will allow every other call to be routed between ILECs and CLECs. Then some CLEC will follow the small, start-up Teleport's strategy in the late 1980s with business customers in New York City. Teleport provided half of a company's T-1 dedicated access lines and left half of the business with Nynex. Teleport's sales pitch-"If either one of our wire centers has a disaster like the Hinsdale wire center fire in Chicago (Illinois Bell and AT&T were out for three weeks), you will still have service." It worked for T-1 access, and it will work for LNP.

OK, so what does this have to do with ILEC-to-CLEC OSS interconnection? Once a carrier gets electronic bonding for LNP ordering and provisioning, that company has a platform to build every other OSS interconnection requirement for LNP based on the standard TMN. This means the design and computer coding of every OSS interface in the country will be based on the same document. Local Service Request Gateways; used for pre-ordering, ordering, provisioning and trouble reporting, can be used for almost every conceivable voice-related service being sold by the ILECs today.

4. State PUCs Will Take Charge
Lockheed has taken the PSTN to the point that LNP is working. Not only did Lockheed do this in 18 months, but there is a single, national plan as well. Yes, Lockheed is talented, but it didn't achieve these two milestones by itself. It took the state PUCs/PSCs to take charge.

Here's how it happened. The Illinois Commerce Commission which regulates telecommunications at the state level, called in Ameritech (which first proposed LNP under its Customer First Plan) and AT&T (which had an LNP plan at a time when dozens were floating around), and said, "Ameritech, use AT&T's plan." Then the Maryland PSC concluded, "We could spend four years, like they did in Illinois trying to figure out how to execute LNP, or we could just tell Bell Atlantic `do it using the AT&T plan.' One by one, the major populous states and even Canada adopted the same plan. Finally the FCC issued its guidelines on LNP, which only the AT&T plan could meet. That's how you got one plan, and competition was actualized within 18 months.

So what does this have to do with making ILEC-to-CLEC OSS interconnection happen? Simply this: Whatever OSS interconnection requirements the New York PUC approves for Bell Atlantic to get into the long distance market in New York, it's highly likely to be the same set of requirements or plan every state PSC will hold up to its in-state RBOC to follow before approving any long distance application.

5. RBOC IP Plan a Loser!
The RBOCs' plan for catching the IP wave is xDSL-based IP service offered via the regulated telco. It's a good strategy to keep your existing customer base; that is, bundling local service with ISP access. Also, it enhances your own ISP offering, particularly if it's the only ISP that can get xDSL access. And of course this strategy allows for sharing of billing systems, customer care infrastructure and more.

This strategy will fail, however, in the long run for the following reasons. First, the regulators are going to get on the RBOCs' case because the Telecom Act mandates: "If you offer it at retail, you must offer it at wholesale and/or unbundled as well." Second, if it's done through the regulated business, all consumers in your market will eventually have to be given access to the service. The problem is that it's not economically practical to do so, because all loops are not suitable for xDSL technology enhancement, particularly in rural areas. Finally, high-speed access via xDSL doesn't buy a consumer anything, in the long run, without a high-speed, national backbone network. Why? Because you're just shifting the bottleneck from access to the backbone network, and since the RBOCs can't provide backbone services until they're allowed into long distance, xDSL will not live up to its high expectations.

So which IP strategy will work for the RBOCs? IP via the xDSLs, except through a separate unregulated subsidiary. This means the RBOCs will get their IP backbone freedom but, in the process, the RBOCs will have to streamline their provisioning of unbundled loops. OSS interconnection will happen with their unregulated IP subsidiaries and the CLECs.

6. Cable Modems vs. the xDSLs
Every day in which the RBOCs delay full-scale IP via xDSL, increases the cable industry's penetration of the market with cable modems. The more cable modems out there in the consumer market, the more economical IP telephony and IP multimedia via cable becomes.

If the telcos are to have a shot at the consumer IP market, they have to move fast. Again it's xDSL via unregulated subsidiaries and freedom to get into the IP backbone business, and that means biting the bullet in providing OSS interconnection with the CLECs.

7. OSS Clearinghouse
Since the Telecom Act of 1996 was passed, Billing World has produced numerous articles pointing out the need for third-party OSS interconnection gateways, service bureaus or clearinghouses. The reason: It's a "natural" as a service business. It's doing something CLECs don't want to do. Who wants to deal with dozens of ILECs, tens of thousands of Universal Service Order Codes (USOCs) with different interconnection procedures that vary state-to-state and in some cases city-to-city? The flip side to creating a new service business to address this CLEC problem is that you have to take a high risk. If you build it, will they come?

It's inevitable that someone or some group is going to take the plunge, and invest the billions to do it right. Note that financial institutions could interface directly for electronic funds transfer, but the SWIFT network is more efficient. You could call an airline directly to get flight information and order a ticket, but using a travel agent with access to the SABRE network is more efficient. Finally, who needs the stock exchanges to buy or trade stock? Point is, gateways and clearing houses eventually were created in those industries, and telecommunications will not be the exception. A dozen or so major players are looking very hard at taking the third-part OSS interconnection plunge even though you can list a dozen or so reasons why it's going to be tough to pull off.

8. RBOCs as CLECs
All major facilities-based long distance carriers are in the CLEC business today. How does an ILEC expect to get long distance freedom in its territory and not expect to seek ILEC OSS interconnection outside its territory?

OK, say Bell Atlantic gets freedom to get into the long distance business in New York. What kind of market presence is it going to have if it can only take in originating calls and complete them through a long distance resale offering from an existing IXC? Yes, this will work well in the residential, very small business or state/local government market. But it will give Bell Atlanic no edge in the Fortune 500 or multinational market.

The RBOCs are going to have to create a national network by becoming CLECs outside their markets-and by asking other RBOCs for OSS interconnection just as vigorously as today's CLECs are doing. They will be stalking SBC territory, and telling state regulators "we did it for CLECs in New York, and this is how it's done." Further to this point: It's highly likely that when Bell Atlantic gets long distance freedom in New York it will have to provide service through a separate subsidiary. This will require regulated Bell Atlantic OSS interconnection, just like the CLECs are receiving.

9. RBOC Wholesale Business Unit Requirements
If voluntary OSS interconnection doesn't work, the regulators will throw up their hands and say, "If you want to get into long distance, you have to set up separate wholesale and retail subsidiaries." The wholesale business sells to the retail subsidiary on the same terms and conditions as they sell to CLECs. This, of course, also pushes OSS interconnection into reality.

10. ILEC Efficiency
If a CLEC has to manually fax 25 pages to an ILEC when it wants to order a loop and port a customer's number, then the ILEC has to manually process 25 pages. Eventually it's going to dawn on the ILEC management that electronic bonding or automated OSS interconnection with CLECs is going to save them lots of money. And if it doesn't occur to them, I'm sure that a state regulator will point it out. Just like it took more than eight years to finally see 1+ equal access fully achieved, and it's going to take equally long to see ILEC-to-CLEC OSS interconnection completed. Meantime we at Billing World will keep you posted on progress.