CenturyLink Joins Telcos Asking the FCC to Reject Special Access Pricing Reform

CenturyLink  has joined a growing number of telcos asking the FCC to reject a proposal by Birch, BT and Level 3, known as the Joint CLECs, asking it to reform special access pricing.

In a filing by its senior associate general counsel Craig Brown, CenturyLink says the commission should reject the Joint CLECs’ “cynical arguments, which are both wrong and flatly inconsistent with the commission’s stated intention of employing a data-driven review of its special access regulations.”

“While the commission is of course accorded substantial deference under Chevron and the Administrative Procedure Act, that deference is not unlimited — particularly when the commission ignores relevant evidence,” CenturyLink said. “Indeed, the Joint CLECs acknowledge that the commission has been reversed multiple times when it has ignored record evidence or concocted arbitrary factors to reduce ILEC rates. The path laid out by the Joint CLECs will lead to a similar outcome, as well as years of investment-choking regulatory uncertainty.”

In its filing, the Joint CLECs said the FCC should use a “market power analysis to identify the relevant special access markets in which incumbent LECs have the ability to set and maintain supra competitive prices.”

“Indeed, the commission has repeatedly relied on such a market power analysis ‘to identify where competition is sufficient to constrain carriers from charging unjust and unreasonable prices’ and has already explained that it intends to conduct a similar analysis here,” it said.

Once the commission has identified the “relevant product and geographic markets in which incumbent LECs have market power in the provision of DSN and packet-based special access services, the agency has wide latitude in deciding how to ensure that special access rates in those markets are just and reasonable and not unjustly or unreasonably discriminatory,” according to the Joint CLEC filing.

As the FCC has gradually decreased regulation, the marketplace for high-capacity data services has become intensely competitive, while shifting to a new generation of enterprise broadband services, CenturyLink said. Customers of all types and sizes increasingly migrate away from special access DS1 and DS3 services, as those services approach the end of their life cycle, it said.

Customers of all types and sizes find an array of alternative sources for Ethernet services — particularly from CLECs and cable companies, as well as ILECs, CenturyLink said.

“CenturyLink has particularly witnessed and benefitted from a recent dramatic upsurge in cable-provided Ethernet access to business locations across the country,” CenturyLink said. “Comcast just announced that it has created a new business unit to target large businesses that have multiple locations nationwide. To facilitate this expansion, Comcast has also signed network agreements with other cable operators to support these national customers.”

Any valid analysis of special access and enterprise broadband services must account for this “significant growth in Ethernet access that is completely independent of ILEC networks,” CenturyLink said.

“The Joint CLECs ignore all this,” CenturyLink said. “They urge the commission to reinstitute a regulatory scheme dating back to the early 1990s, when ILECs were the only providers of high-capacity data services to most businesses.”

“The commission should ignore the Joint CLECs’ proposal and instead use the evidence gathered in the special access data collection, supplemented with evidence of marketplace developments since 2013, to adopt “commonsense rules that account for the ongoing growth in competitive choice for high-capacity business data services,” it said.

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