Fitch: Access Line Erosion Increasing in Severity For U.S. ILECs.CHICAGO -- The second quarter is a seasonally weak quarter for the U.S. local exchange industry, but access line erosion and its effect on primary-line totals is increasing in severity, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . Much of the increase attributable to the cable digital telephony Digital telephony is a technology used in the provision of digital telephone services and systems. Since the 1960s it has almost entirely replaced the old telephone system that used analog telephony. offerings. Total switched access lines decreased year-over-year for incumbent local exchange carriers (ILECs) in second quarter 2006 by 6.5%. However, due to the increased competitive focus on retail consumers, the divergence between residential and business access line erosion in increasing. For example, during second quarter 2006, year-over-year residential access line totals eroded at approximately 8.4% compared to only 2.6% for business. Cable operators have indicated that they experienced more than 700,000 net new additions to their digital telephony service offering during second quarter 2006. The growing success of cable telephony See cable telephone. is consistent with its increasing availability. Fitch believes that a peak in losses to cable telephony could occur in the next few quarters and then stabilize or fall as pent up demand settles. While cable telephony is a growing competitive threat, ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. operators continue to indicate that access line losses to wireless substitution is still the greatest source of erosion. Fitch believes that wireless substitution poses a greater long-term threat then cable telephony and will maintain a steady erosion of subscriber bases. Consumer retail revenues were directly affected by the degree of access-line erosion present at each carrier during second quarter-2006 (2Q'06). ILEC operators have been very successful growing their digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and (DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary ) customer bases and Fitch believes that the ILECs demonstrated a substantial advantage over cable in acquiring market share during second quarter 2006. Fitch estimates that the ILECs share of net additions of high speed data was 60% compared to the cable's 40%. As a result of this success, total wireline connections, represented by the combined total of switched access lines and DSL connections, declined by approximately 2.7% year-over-year in 2Q'06. Total wireline connections showed even greater stability for rural ILECs with an approximate decrease of approximately 1.2% year-over-year during second quarter 2006. Additional trend discussion, data points, and individual operator comparisons are available in Fitch's 'Quarterly ILEC Comparative Statistics and Commentary' report, which is a revision of Fitch's older report. The new report offers additional operational and financial comparisons as well as graphical representations while maintaining a broad ILEC comparable statistics and history base. The full report is available on the Fitch Ratings web site at www.fitchratings.com. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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