CenturyLink’s Special-Access Proposal Criticism Dubbed ‘Unreliable’

Incompas (fka Comptel), the trade association for competitive networks, is slamming CenturyLink’s criticism of its proposed pricing framework for the business data services (BDS), or “special access” market.

This spring, the Federal Communications Commission proposed a new “technology-neutral framework” to regulate the market for BDS. Under its proposed framework, the FCC would classify a market as either competitive, in which service providers would be subject to little oversight, or noncompetitive. In a noncompetitive 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 May 2 further notice of proposed rulemaking (FNPRM).

Earlier this month, Verizon and Incompas submitted a proposal that includes price reductions and a competitive market test for the FCC to consider as it analyzes the market.{ad}

Verizon and Incompas said the commission should set price caps on TDM-based BDS in areas served by price-cap ILECs.

In its filing with Frontier and FairPoint, CenturyLink said the rate reductions are justified only “if ILECs’ average cost of providing service had declined steeply since 2005.” CenturyLink said its “operating expenses have fallen at a much slower rate than the demand for its services … causing CenturyLink’s average cost of providing service to steadily climb.”

In its latest FCC filing, Incompas said CenturyLink’s “purported support for this claim, however, is unreliable.”

“It depends on opaque, results-driven accounting, and is inconsistent with prior statements by CenturyLink leadership,” Incompas said. “Furthermore, the company’s financial filings fail to support the claims made in the letter. In fact, CenturyLink’s earnings statements show that the company is exploiting its market power to reap large and growing profits in the marketplace. The Commission therefore should reject CenturyLink’s assertion.”

The Commission should find that the proposed rate reduction is necessary to correct the “failure to make productivity adjustments to the rates of TDM-based services for more than 10 years and to restore effective price-cap regulation for TDM-based BDS offerings,” Incompas said.

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