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AT&T, CenturyLink: Special-Access Proposal Data Is ‘Irretrievably Flawed’

Regulation

Josh LongAn expert’s report and other analyses submitted in a Federal Communications Commission record were based on flawed data that understated offerings of Ethernet cable service, according to AT&T, CenturyLink and other local phone companies.

The data relates to competition in the $45 billion market for business data services or “special access,” which the FCC is in the process of reforming.

“Specifically, the record now shows that the major cable providers were able to provide true business data services (‘BDS’) through metro Ethernet (not what the Commission calls ‘best efforts’ service) in 22 times as many census blocks as was reflected by their original responses to the agency’s data request,” the phone carriers declared in a motion filed June 17 with the FCC.{ad}

Just before the FCC adopted a May 2 further notice of proposed rulemaking (FNPRM) in connection with the years-long special access proceeding, Comcast explained in an ex parte letter filed with the Commission that it previously had not reported locations connected to nodes that had been upgraded to allow for the provision of Ethernet-over-HFC (hybrid fiber-coaxial) service as of 2013, according to the motion.

“Subsequently, Comcast filed a list of all business locations that could be served via metro Ethernet-enabled headends in 2013,” the filing explained. “Each of the other major cable companies … revealed they had made the same omission as Comcast.”

Last month, Comcast submitted a confidential list of business locations that as of April 2016 could be served through its “HFC plant from its headends that were metro-Ethernet enabled as of 2013, notwithstanding that the overwhelming majority of those business locations are served only via best-efforts Internet access connections,” the cable company noted in a June 1 FCC filing.

The company said it was submitting the data in response to a request by FCC staff, even though the company didn’t think it was relevant to the agency’s examination of business data services.

CenturyLink, AT&T and other phone companies disagree. The report by Dr. Marc Rysman, who the FCC engaged to examine competition in the special access market, “as well as nearly all other analyses submitted into the record, were based on an irretrievably flawed data set that severely understated cable providers’ ability to provision true business data services (‘BDS’),” the phone companies argued in their motion.

The FCC’s failure to reconsider its proposals, develop a new plan and allow parties to comment on the new data “would deny parties due process of law, and any resulting rules would be arbitrary and capricious,” declared the motion, which was filed by …

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… AT&T, CenturyLink, Cincinnati Bell, Consolidated Communications and Frontier Communications.

FCC spokesman Mark Wigfield said the agency’s staff is reviewing the motion.

“The Commission will, of course, fully consider the impact, if any, of additional data from cable companies as part of its analysis,” he said in an emailed statement to Channel Partners. “The presence of cable facilities that could be used to provide low-bandwidth business data services was only one of many factors that Dr. Rysman reviewed.”

The National Cable & Telecommunications Association (NCTA) declined to comment on the phone carriers’ recent motion.

The FCC this spring proposed a new “technology-neutral framework” to regulate the market for business data services. Under its proposed framework, the FCC would classify a market as either competitive, in which service providers would be subject to little oversight, or non-competitive. In a non-competitive market, providers would be subject to “one set of tailored rules” that would include “the use of price regulation and the prohibition of certain tying arrangement that harm competition,” according to the FCC’s FNPRM.

In an April 28 press release, the FCC said data it collected “shows that competition in this essential market is uneven, and that the FCC’s existing rules have failed to identify markets where competition is lacking, even as they have failed to identify competitive markets.”

A Comcast senior executive vice president, David Cohen, blasted the FCC’s proposals as a “heavy-handed” and “upside-down” framework that would dissuade investment and competition in the market for business services.

“For decades, the FCC’s special-access regime has distinguished between ‘dominant’ incumbent providers and ‘non-dominant’ competitors (like Comcast), and has imposed rate regulation only on the dominant providers that have the ability to control prices,” Cohen wrote in a blog.

“This rulemaking, like a bolt out of the blue, would lay waste to that longstanding and eminently sensible regulatory framework and would brush aside basic tenets of antitrust law,” he noted later in the blog.

NCTA and incumbent phone carriers including AT&T were equally dismayed by the FCC’s plans. Ahead of the FCC’s vote in April, AT&T insisted the market for business data services is competitive and expressed concerns that a proposed policy of “monopoly-era rate regulation” would discourage investment in the construction of fiber networks.

But others in the telecommunications industry responded positively to the FCC’s proposed framework. Describing the special access market as “long broken,” Sprint declared the FCC’s action lays the foundation “for real reform.”

“Importantly, the FCC formally recognized what competitive carriers have long experienced, that large incumbents exercise overwhelming market power and impose unreasonable rates, terms and conditions over a critical part of our nation’s networks,” the company said.


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