FCC Special Access Call Continues to Draw Crowd

Comments focus on timing of data collection, state of market, FCC resources to conduct reviews

By John Eggerton -- Broadcasting & Cable, 8/23/2012 12:27:50 PM

The FCC's party line vote to suspend its deregulatory triggers for special access (broadband business service) prices continues to draw both fire and fans from industry.

"With this action, the FCC has done right by consumers, and it's taken a first step toward promoting competition in wired and wireless communications," said Public Knowledge senior staff attorney John Bergmayer. "While consumers don't pay high special access fees directly, they still bear their cost. When competitive carriers have to pay unreasonably high rates for connectivity they may have to pass the costs along to users, or slow down new deployment."

COMPTEL, whose independent telecom members have complained about price increases for access to major carriers' plans, were all for the moratorium, as well as for suspending the dereg triggers before it has collected industry data on the competitiveness of the market, the latter which was roundly criticized by the major carriers, FCC and Hill Republicans and various industry groups.

"We commend the Commission for taking this important step in developing pro-competitive policies for the broadband market," said COMPTEL CEO Jerry James. "For years, COMPTEL has advocated that the framework for pricing of special access is broken and reform was long overdue. With this order, the Commission acknowledges that changes must be made in order to ensure that businesses across America can continue to benefit from competition and the innovative broadband services our members provide." He added: "We appreciate that the Commission has suspended its pricing flexibility standards as it prepares to further collect and examine industry data that will provide a true picture of the market."

Not so appreciative of that suspension was AT&T, among those whose petitions for deregulation are now in limbo. While the company said the mandatory data collection was necessary, to suspend the triggers before it determines the current state of competition for the services was putting the cart before the horse.

"If, as the FCC itself stated earlier this year, it does not have the data to support ‘claims that special access rates are unreasonable,' then suspending the existing triggers seems premature," said AT&T senior VP Bob Quinn in a statement.

"[I]f the FCC's aim is to revisit its prior pricing flexibility decisions it is committing increasingly scarce staff resources to re-review 250 market areas," said Quinn, "a process that took the FCC over a decade to complete the first time around.  And, this re-review could conservatively grow to 500 market areas or more, if the size of the market area is reduced, as reports indicate. The end result of which is a mountain of work designed to set the price for a relatively low-speed business service that does not even meet the National Broadband Plan's definition of broadband in the consumer market."

"The FCC has talked about its priority being to drive more and faster broadband to more Americans.  Yet, the FCC's most recent action does nothing to promote broadband and instead has the potential to divert capital expenditure away from investments in next generation network infrastructure," blogged Leslie Marx, Duke University econ professor and former FCC chief economist under chairman Kevin Martin.

Walter McCormick Jr., president of USTelecom, which represents major telecom providers including AT&T, Verizon and CenturyLink, shared those concerns. "We are disappointed that the Commission has chosen to take this action despite its recent repeated admissions that it does not have adequate information to evaluate the competitiveness of the high-capacity services marketplace." he said.

Ditto Verizon in its statement from Donna Epps, VP of federal regulator affairs. "While today's Order acknowledges that the current rules fail to capture the full extent of existing competition, the FCC, before taking any action, should have collected the data it repeatedly has said it needs to evaluate the marketplace. There are many providers -- cable companies and CLECs -- that compete vigorously with special access. Given this intense competition, any efforts to impose new pricing regulation are unjustified and will depress investment in these networks so critical to our economy."

The FCC has promised to begin the process of collecting the data -- it will be a mandatory for telecom providers -- within the next 60 days. But given that the FCC's new paperwork requirements will have to be vetted by the Office of Management and Budget, collection will likely not begin for several months at the earliest.