Is Structural Separation Still Relevant?

Australia, New Zealand and Singapore are among nations that have instituted a structurally separated telecom network environment, especially regarding the legacy national telecom networks. 

Infrastructure sharing is a more common trend, as when mobile operators agree to share the cost of cell towers. 

Municipal broadband networks represent a similar effort to create more competition, or higher-quality consumer services, using a wholesale approach where one entity builds and operates the network, and any number of retail providers are allowed to use the network to create their own retail efforts.

Compared to two decades ago, there seems less talk about structural separation as a method for either increasing capital investment or limiting the cost of such investment. Municipal networks, building brand new facilities, seems to be the bigger trend in some markets, such as the United States. 

While it might be too early to draw final conclusions, there already is some mixed evidence of the value of such decisions. Some three decades ago, I was part of a study team looking at a proposal by Rochester Telephone Company to divest its local communications monopoly, creating a wholesale framework, in return for which RTC would be granted freedom to enter the long distance business, at that point.

Rochester Telephone won permission from state regulators to split into separate companies: a regulated wholesaler of telephone services named Rochester Telephone Corp. and an unregulated retailer named Frontier Communications of Rochester.

After approval, RTC become Frontier Corp. in 1995. In August 1995 Frontier Corp. merged with ALC Communications Corp., acquiring in that move Confer Tech International, the world's largest dedicated multimedia teleconferencing company. 

Later in the year Frontier acquired LINK-VTC, a videoconferencing services company. A month earlier, Frontier had purchased Schneider Communications Inc., a long-distance voice and data carrier, and its 81 percent interest in LinkUSA Corp., a long-distance services provider, for $127 million. 

Other 1995 acquisitions were WCT Communications, a West Coast long-distance company; Enhanced TeleManagement, Inc., offering integrated telecommunications services in six states; American Sharecom, Inc., a Minneapolis-based long-distance company; and Minnesota Southern Cellular Telephone Co. Frontier also established its first international subsidiary for integrated services, London-based FronTel Communications Ltd.

In 1999 the company was acquired by Global Crossing. In 2001, Global Crossing North America's local exchange assets, including Frontier Telephone of Rochester and Frontier Subsidiary Telco, and ownership of the Frontier name were sold to Citizens Communications Company, which in 2008 renamed itself Frontier Communications.

I have no idea how well the wholesale model actually has worked out in the former Rochester Telephone service area, but it is not clear to me that competition or investment has been significantly different after the structural separation. 

If I had to guess I’d say the emergence of Charter Communications as a telecom services supplier has had more impact on prices and the quality of service than the structural separation.