n it actually costs them to provide it. The problem with this model is that only the ILECs enjoy these sub- sidies, which means that CLECs believe themselves to be penalized right out of the starting gate. Couple that with the fact that 40 percent of all CLEC revenues go to the ILECs for access charges and we begin to see Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com) Copyright © 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website. The Byzantine World of Telecom Regulation The Byzantine World of Telecom Regulation the basis for much of the acrimony that exists between the incumbents and the new entrants. As a result of these and other factors, CLECs typ- ically ignore the residence market in favor of the far more lucrative busi- ness markets. Business markets are significantly easier and less costly to provision than residence installations because of the dominance of mul titenant buildings (MTUs). Clearly the metro market is a desirable place to be. Of course, there is an added issue: Because of their overall market dominance, ILECs control more than 60 percent of all metro spending. The regulatory environment in many countries fails to address the disparity that exists between incumbent providers and would-be com- petitors. Recent rulings, such as the United States Communications Act of 1996, consisted of a series of decisions designed to foster competition at the local loop level. Unfortunately, by most players' estimations, they have had the opposite effect. The introduction of new technologies always conveys a temporary advantage to the first mover. Innovation involves significant risk; the temporary first mover advantage allows first movers to extract profits as a reward for taking the initial risk, thus allowing them to recover the cost of innovation. As technology advances, the first mover position usu- ally erodes, so the advantage is fleeting. The relationship, however, fos- ters a zeal for ong