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News Releases
New Edge Networks: All Bell Companies Will Be Structurally Split in Five Years
NEW YORK – (June 20, 2001) – The chief executive of the nation’s largest competitive broadband services provider in small and midsize cities told gathered investors in New York that all of the regional bell operating telephone companies will be structurally split into separate wholesale and retail businesses within five years.
Dan Moffat, president, CEO and co-founder of New Edge Networks, says there’s a rising ground swell around the country for structural separation of the RBOCs. The issue is now before regulators or legislatures in at least 12 states and momentum is rapidly growing in other states for increasing competition over local communication services.
Speaking to investors at the Goldman Sachs Leveraged Finance Group Emerging Telco & Internet Infrastructure Conference 2001 in New York, Moffat says structural separation will occur because the RBOCs have an inherent conflict of interest in their role as both a competitor to new communications services providers and as provider of infrastructure to those same companies. The driver is growing demand for broadband services and limited competition.
“The Telecom Act of 1996 forced the RBOCs into an awkward position of providing great service to the folks they compete against,” Moffat says. “Unnatural motivations have caused unnatural acts by the big telcos. There are not enough regulators and legislators in the world to police their behavior in their dual role of regulated wholesale provider and competitive retail entity.”
“Competitive communications providers have sped up development of advanced services and lowered telecom pricing by giving customers choices,” Moffat says. “We cannot go back to the era of, ‘We don’t care. We don’t have to. We are the phone company.’ Structural separation is good for customers. It’s good for the competitors. And, in the long run, it is good for the big telcos.”
Under structural separation, the RBOC’s local telephone operations would be split into two separate legal entities – one for selling to end users such as consumers and businesses and the other for operating the local telephone network and selling access to the network on a wholesale basis to all telephone companies, including the RBOC retail operations. The four RBOCs are: BellSouth Corp. (NYSE: BLS), Qwest Communications (NYSE: Q), SBC Communications (NYSE: SBC) and Verizon Communications (NYSE: VZ).
“Smart RBOC managers will see that structural separation will lead to more overall growth, making digital subscriber line technology the leading broadband access option over cable TV modems,” Moffat says. “Structural separation also will encourage more competition among the major national providers because it will be easier for each of the RBOCs to offer out-of-region retail services.”
Currently, to offer long-distance and broadband data services in their own regions, RBOCs must demonstrate that their local markets are open to competition. To win regulatory approval for offering these competitive services, RBOCs are likely to volunteer their own plans to structurally separate their companies rather than risk facing regulatory or legislative mandates.
About New Edge Networks
New Edge Networks was founded in June 1999 to provide broadband services nationally in small, midsize cities where populations generally range from 5,000 to 250,000. The company owns and operates a national data communications network with 18 regional aggregation points and almost 600 nodes making it one of the largest ATM networks in the United States. Through its Alcatel network, New Edge Networks delivers a full range of consumer and business-class high-speed Internet access as well as advanced broadband services such as wide area networks, virtual private networks and frame relay. New Edge Networks plans to overlay voice, video and other value-added broadband services and to remain technology agnostic. Top-tier private venture firms, global financial institutions and worldwide technology firms provide financial backing to New Edge Networks. The company's Web site is www.newedgenetworks.com.
Contact:
Sal Cinquegrani
(360) 906-9723
ATTN: New Edge Networks news releases contain information that is accurate as of the date they are issued. Information contained in past news releases may become out of date and the company does not assume responsibility for updating information contained in past news releases.