Copper Price Hikes, Shutoffs Rock Telecom Customers, Partners

Customers and their partners are seeing a steady stream of price hikes and service decommissions as incumbent local exchange carriers (ILECs) make a “backward retreat” from copper-based POTS and TDM.

Technology advisors say they’ve seen plain old telephone service (POTS) and time division multiplexing (TDM) rates increase drastically on existing customer contracts. In one case, the ILEC increased all business flat-rate lines to more than $1,000 per month for a POTS customer.

Transit Broker’s Evan Gillman

“We have been seeing exorbitant rate hikes (especially from the LECs) which are essentially creating unreasonable price increases for organizations,” said Evan Gillman, principal at Transit Broker. “The hikes are borderline extortion and often times have been so high, customers are absolutely forced to migrate without any level of negotiation.”

Nitel’s Ryan Rostvold

Ryan Rostvold, vice president of product at Nitel, reports ILEC customers seeing rate hikes of 300-500% percent on TDM services. And POTS has seen similar numbers, he said. However, he noted that the alternative to price increases has been shutoffs.

“We have experienced both carriers saying the service is ending and providing relatively short notice for clients when the service is ending on POTS and TDM services, as well as rate hikes,” Rostvold told Channel Futures.

Barry Bazen, founder and president of Profit Advisory Group, said rate hikes and service discontinuation are “becoming very commonplace across carriers.”

Profit Advisory Group’s Barry Bazen

“Customers are getting POTS notifications regularly that say, ‘Hey, we’re shutting down copper service in your rate center. You’ve got 90 days to move the service or lose the number,'” Bazen told Channel Futures.

Regulatory Changes

Brian Washburn, Omdia’s research director, service provider enterprise and wholesale, said the price hikes reflect the Federal Communications Commission allowing carriers to embrace market-based pricing for copper services. The FCC in August 2019 granted ILECs forbearance from obligations that had restricted their copper policies dating back to 1996. Specifically, the agency had required carriers to offer non-carrier customers the same wholesale rates it offered to carrier customers for the same services. The forbearance memorandum ended that policy, stating that the price caps were holding the carriers back from developing new and better services.

Omdia’s Brian Washburn

“We find that it is no longer necessary to require price cap LECs to bear these once-upon-a-time market-opening obligations that today amount to disparate regulatory burdens that frustrate the transition to advanced communication services offered over next-generation networks,” the Commission wrote almost four years ago.

The Commission also set a deadline of August 2022, by which carriers needed to move their UNE Analog Loops to an alternative service. Many media outlets incorrectly reported that this date meant an instantaneous decommissioning of all POTS lines. In reality, the transition order only applied to a tiny subset of POTS lines.

Spectrotel’s Ross Artale

However, the forbearance around UNE allowed ILECs to get rid of resale discounts and stop running UNE-L, Spectrotel CEO Ross Artale said.

“Any resale platform or UNE DSO loops were subjected to massive rate increases. We are now dealing with colo discontinuance from CLECs, and that is driving unprecedented rate increases and consequently forcing digital transformation,” Artale told Channel Futures.

Artale said transformation benefits everyone, provided it comes with advance notice. But colo discontinuation has put pressure on …