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Verizon, Sprint Back FCC Chairman Wheeler’s New Special-Access Plan

Regulation

Josh LongFederal Communications Commission Chairman Tom Wheeler on Friday outlined his plans for reforming the $40 billion-a-year special-access market or what he described as “business data services” that are “little known but hugely important in our connected economy and society.”

While he acknowledged a changing marketplace with the emergence of cable companies and IP-based technologies, Wheeler noted in a blog that “competition remains uneven, with competitive carriers reaching less than 45 percent of locations where there is demand.”

FCC Commissioner Tom WheelerWheeler revealed circulating to his colleagues a further draft proposed rulemaking notice to develop a new regulatory framework governing the special-access market. He said he wants the FCC to adopt a final order this year.

A Verizon executive described Wheeler’s proposal as “a path towards a balanced framework that would put all providers on equal footing under the same set of rules.”

“It would also rely on competition, rather than regulation, whenever possible,” said Kathleen Grillo, Verizon’s senior vice president and deputy general counsel of public policy and government affairs, in a statement. “The framework recognizes that many different companies compete today to serve business customers and that the Commission should approach the marketplace in a technology-neutral manner.”{ad}

Laying out the first of four key principles, Wheeler said he has proposed to identify competitive and noncompetitive markets and “adopt a tailored regulatory framework to mirror those distinctions.”

“The new approach must be technologically neutral,” Wheeler noted. “Rules need to reflect today’s economy and the differences between products, places or customers, and can’t be based on artificial distinctions between companies or technologies.”

Over the last 20 years since Congress opened up the local phone markets to competition with the Telecommunications Act of 1996, competitive carriers have invested billions in network infrastructure to serve American businesses. But they still rely on incumbent phone networks, such as those controlled by AT&T and Verizon, to reach the “last mile” of many buildings.

Incumbents and competitive carriers have asserted vastly different opinions on the competition that exists today in …

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… the wholesale market for business data services. The FCC has collected an unprecedented amount of data to examine where competition in the special-access market is strong and where it is weak or lacking.

“High-speed, dedicated ‘special access’ connections are critical inputs to nearly every application and service that powers our economy and the overwhelming monopoly or duopoly control over those connections has cost our economy $150 billion in the last five years alone,” Sprint said in a prepared statement. “The Chairman’s recommendation today moves to end that enormous drag on our economy, ushering in a new framework supported by rules that look forward not backward, towards competition and away from market failure and artificial technology or legal distinctions.”

Others in the industry contend FCC regulations could hamper investments in broadband data services. On Thursday, USTelecom – a trade association in Washington, D.C., representing broadband providers – announced a study that it said found new FCC regulations could eliminate tens of thousands of jobs, slash economic output by $3.4 billion over a five-year period and prevent 67,000 buildings from obtaining access to fiber.

“It is unfortunate that some are calling on the FCC to adopt policies that meddle with the competitive dynamics that have been increasing choice and lowering costs for business broadband customers,” USTelecom President Walter McCormick said. “As this paper illustrates, a competitive business broadband marketplace has emerged in the United States just as Congress envisioned when it passed the 1996 Telecommunications Act.”

In his blog, Wheeler also announced a proposal to prohibit certain practices in contracts “that slow the switch from legacy TDM services to newer IP-based services.”

Last year, the FCC opened a probe to investigate certain phone carriers’ tariff pricing plans for special access to determine whether they are anticompetitive and unreasonable as alleged by certain competitors that rely on incumbent special-access circuits to connect the “last mile” and compete with the likes of AT&T and Verizon in the business market.

Wheeler’s “order will put an end to some of the worst of the incumbent telcos’ anticompetitive tactics—tactics they use to lock up the market, keeping competition out and helping them maintain and exploit their market power,” said Joseph Cavender, vice president and assistant general counsel for federal affairs with Level 3 Communications, in a written statement.

 


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