@LINK FAQ SHEET FOR HUBBING
Q1. If my company participates in the hubbing project, will it
change my existing access arrangements with the IXC's and the RBOC?
A1. No. The plan is to lease and/or build dark fiber from the meet
point to the major entrance facilities sights, replacing SBC as
the intermediate carrier for direct trunk-transport. The existing
billing percentages, mileage and NECA rates will still apply as
they do today. The only difference will be that @Link will get the
remaining transport for the haul into Tulsa or Oklahoma City, rather
than SBC.
Right now, you bill a portion of the access you have to IXC's,
based on billing percentages and they range from around 2% to 16%,
depending on the configuration and tariff filing. SBC is currently
billing the remaining 84-98% of the transport and entrance facilities
to their hub sites. @Link proposes to lease/build fiber to those
same locations and bill this transport to the carriers, rather than
SBC.
Q2. Will I be required to change my current central office or switching
configuration?
A2. The way the transition would take place is to swing existing
trunk groups away from the SBC fiber and over to the @Link fiber.
That will probably be done at the patch panel. However, depending
on how much light capacity you have at the central office transmission
equipment, additional optic cards, MUX cards, 56-port patch panel,
cabling, fuses, WDM devices and pig tails will be needed to connect
with the @Link fiber. Two fibers will come into the central office,
hit WDM devices, split out to four fibers and terminate on four
optic cards in the terminal. On the other side of the fiber terminal,
the DS1's will be broken out by the MUX cards and sent to the new
patch panel, for cross-connection to the switch.
There is no envisioning of any change from the current network
configuration, aside from additional equipment required to cut the
circuits over to the @Link fiber.
Q3. Who is expected to pay for the equipment at the central office
sites?
A3. @Link has budgeted amounts to purchase the equipment necessary
for each tandem or class 5 office. However, many may be concerned
about cost study or collocation issues and wish to purchase this
equipment on their own. If that is the case, the capital budget
will be reduced by this amount and the central office will remain
100% unaffected by third party equipment.
Q4. Will the IXC's be interested in participating in @Link's plan?
A4. In other states, this has already been done with the carriers.
There are two scenarios that have happened in these states: 1) The
carriers were given an incentive to switch or 2) they were forced
to switch, through the re-homing LERG process. We are envisioning
offering financial and technical incentives to the IXC's to make
switching transport attractive. In essence, we are offering reduced
pricing from SBC's tariff rates, single rating, rather than multiple
or jurisdictional rating and collocating in the same hub sites that
they connect with today, so the change would not be laborious nor
costly for them. We think these are significant incentives for the
IXC's. To date, we have not spoken with the appropriate decision-makers
within the IXC organizations, but the feedback we have heard so
far, has been positive, rather than discouraging. It is our intention
to find out the interest level with the major IXC's as quickly as
possible, prior to making any commitments or spending any dollars.
Q5. How much would it cost for our company to participate?
A5. It will depend on the level of ownership participation. Right
now, the capital budget is $3,750,000. If there are 6 participants,
each would contribute $625,000, at 100% equity. With 8 participants,
each would contribute $468,750 at 100% equity. The more participation,
the less each participants contribution will be and the more earnings
and distribution potential from the "hubbing" project.
Q6. How will the distribution work?
A6. We envision all participants equally vested in the entity and
receive equal distributions on an annual basis. A board of directors,
consisting of owner representation, officers and advisors, will
determine a cash retention ratio and/or distribution levels, based
on the performance and needs of the firm.
Q7. How come the 'hubbing' project cash flows?
A7. Bottom line is the reduced cost of dark fiber. Since the late
1990's, there has been a glut of fiber capacity in the ground. In
addition, many firms who placed the fiber have either gone bankrupt
or have radically modified its price structure in order to get as
much traffic over these facilities as possible. When comparing the
first-glance pricing of IRU's or fiber leasing, to billable transport
rates, there is plenty of marginal revenue.
Q8. Will the FCC's changing of inter-carrier compensation affect
or create a lot of risk for the future transport revenue?
A8. From the plans we have seen, particularly the latest filed
by the ICF group, transiting carriers or third party carriers will
continue to be paid in order to get traffic from meet-point to meet-point
or edge to edge, even though the other network element rates will
be phased out. Being financially responsible for the fiber network
being put in place will permit us, under the ICF plan, to continue
billing transport. However, the real risk could be the financial
incentives now, compared to what they may be by 2013, under this
plan. We do not envision these incentives going away, due to the
structure of being a transport entity, but there is a chance that
SBC costs or another third party entity under-price @Link transport
costs. We intend to assure this will not happen by keeping pace
with regulatory and industry trends. We also do not believe the
market will set prices below costs.
