Sprint, Others Laud FCC Special-Access Moves, Eye New Constraints

Advocates of special access regulation praised FCC plans to release industry data and commission a study of the business market for telecom services, the competitiveness of which is highly disputed. Some suggested the data analysis would support their calls for regulators to constrain the rates and practices of Bell/ILEC special access offerings to wholesale and retail business customers over dedicated circuits. Sprint said it was encouraged the FCC is moving forward with its “long-awaited, data-driven analysis” of the business market. “We are confident the data will incent the Commission to update 1990’s policies, which have undercut competition, innovation and productivity,” said a spokesman in an emailed statement.

The main ILEC trade group disagreed. “The FCC has been encouraging competition for business customers since the mid-1980s,” USTelecom President Walter McCormick said in a statement Friday. “Thirty years later, we are confident that the data the FCC has collected will show that its policies have been successful and that there is broad competition for these customers. Comcast’s announcement this week that it has struck privately negotiated wholesale arrangements with other cable companies across the country to help it provide business enterprise services is just the latest evidence of competition in this sector, occurring without the need for government to step in."

A CenturyLink official took a more wait-and-see approach to the data. “We believe we have a competitive market. We will look at the data and see what the data show,” Melissa Newman, senior vice president of federal regulatory policy and affairs, told us. AT&T and Verizon didn’t comment.

The FCC plans to begin releasing detailed business market data (which it has collected from the Bells, other ILECs and competitors) subject to a protective order to safeguard commercially sensitive information, an agency release said Thursday (see 1509170067). The Wireline Bureau issued an order Friday denying most objections to release of individual company data, though in some cases it clarified the information parties signing the confidentiality agreements would have to provide before they would be given access. The agency Thursday also pushed back the deadlines for comments and replies in its special-access rulemaking to Nov. 20 and Dec. 11.

The FCC said it contracted with Boston University economics professor Marc Rysman to provide advice and a white paper on competition and practices in the special-access market, which the agency said generated $40 billion in annual revenue. Rysman is a “leading practitioner in empirical industrial organization, specializing in network effects, two-sided markets, standardization and compatibility, notably in telecommunications,” said the FCC release. Lists of his publications (here, here and here) reveal a prolific writer of technical literature. Rysman told us he was barred from discussing the FCC special-access project by the terms of his contract.

An attorney for business/enterprise customers applauded the FCC moves. “It’s good to have a process in place,” said Colleen Boothby, counsel of the Ad Hoc Telecom Users Committee, in an interview Friday. “This is the real crunch time in the proceeding because now is when we open up the data and get a much more focused, clearer picture about what’s happening in the marketplace -- and the rhetoric goes out the window. … There’s always plenty to fight about no matter how clear the data are, but starting with the facts is always better.”

Competitors to ILECs also welcomed the FCC action. “For too long incumbent providers like AT&T and Verizon have leveraged their market power, derived from legacy networks built under monopoly rules, to set up roadblocks to competition in most markets across the nation,” said Comptel CEO Chip Pickering. “The special access proceeding provides the most comprehensive process for a data driven solution by any FCC, that will help open more markets for competition. After a decade-long delay of much needed reforms in this market -- reforms that will provide significant benefits to American businesses and consumers -- we are pleased to see Chairman Tom Wheeler and the FCC are moving this process forward … and that the Chairman has committed to completing this proceeding during his tenure.” Level 3, Windstream, and the Broadband Coalition emailed statements commending the commission.

USTelecom’s McCormick said business customers need advanced communications infrastructure to compete globally. “The key issue for the FCC and the country is modernizing policy to get robust investment in new fiber optics and Internet services to replace aging low-capacity special access services,” he said.

Comcast's national initiative targeting big business is new evidence that competition is thriving in the enterprise service market, USTelecom said in a filing to the FCC Friday that had not yet been posted in docket 05-25. "This effort expands Comcast’s focus from the small and medium businesses that it has been aggressively competing to serve to the largest companies in the country," USTelecom said. "Comcast entered into wholesale agreements with other cable companies to deliver those services where it does not currently have facilities, and it hopes to win national customers from companies like AT&T and Verizon. The 2013 data the Commission collected does not capture these and other recent marketplace developments." The Comcast move (see 1509160009) shows cable is a "major national competitor for enterprise broadband services," cable has "wholesale capacity" and the commission's 2013 data is "stale," USTelecom said.

Free State Foundation President Randolph May worried the FCC is on the wrong course: "I think it’s just a case of relentless special pleading by those who would benefit from having the rates regulated as low as they can possibly go.” May said regulating incumbent rates undercuts the efforts of competitors using their own facilities. He also suggested the commission set itself a daunting task in trying to analyze the state of competition in dedicated business offerings -- providing service to individual office buildings, interoffice transport and wireless backhaul -- in local markets around the country.