Big Telcos Defend Special Access Pricing Practices in FCC Tariff Investigation
Large telcos said the FCC should close or delay a probe of their special access terms and conditions that the companies said were lawful. AT&T, CenturyLink, Frontier Communications and Verizon made lengthy filings in docket 15-247 defending their special access pricing practices, which often contain discounts in exchange for volume or term commitments. The Bells/ILECs were responding to a Wireline Bureau tariff investigation of their special access contracts (see 1510160060), which rivals allege are anticompetitive and “lock up” much demand for traditional business data services (see 1510080051). Competitors continued to criticize incumbent telco practices Monday.
AT&T disputed CLEC charges that four pricing plans with volume commitments it offers customers had locked up much of the business market. “These claims are fundamentally inconsistent with the facts, the nature of these tariffs, the law, economic theory, and the basic realities of today’s marketplace,” said the telco's 275-page filing. “Special access customers today can and do choose from a wide array of options, most of which they can obtain from multiple providers. These include Ethernet services, unbundled network elements, DS3 and optical services. AT&T’s legacy TDM DS1 services, at issue here, are merely one such option, and a rapidly declining one at that.” The company said the FCC should find AT&T tariffs are consistent with the Communications Act and close the investigation.
CenturyLink also urged the FCC to close the investigation and find two of its special access discount plans lawful. “To find the pricing plans at issue here contrary to Sections 201 and/or 202 [of the Communications Act], the Bureau would need to upend more than a century's worth of antitrust law and commentary, repudiating settled legal holdings that the practices under examination are lawful and procompetitive and indeed further competition. There is no basis on which it could do so,” said the telco's 55-page white paper, one of its many filings totaling 223 pages.
Verizon said the FCC shouldn't even continue with its investigation until it completes its broader review of its special access framework in a general rulemaking in docket 05-25. CLEC complaints about incumbent discount plans are essentially complaints “that ILECs’ undiscounted rates reflect ILEC market power and that customers lack other sources of supply,” the telco said in its 183-page filing. Those complaints are “meritless,” Verizon said: Analysis of data collected in the broader rulemaking shows ILECs “lack market power” and “competition is increasing very rapidly, due in large part to aggressive and widespread competition from cable operators that are already nationwide leaders in providing Ethernet services.” The commission should do market analysis in the industrywide rulemaking before addressing issues in the investigation, where it could then find Verizon’s discount plans “are just and reasonable,” said the company.
Frontier said it acquired the operations and tariffs under review from Verizon in 2010 and from AT&T in 2014. As part of the regulatory approval process, Frontier said it agreed to honor all obligations under the tariffs. “Frontier has not adopted any substantive changes to the rates, term, and conditions of the tariff plans under investigation since acquiring them,” the company said in its 160-page filing, adding it had limited knowledge about the tariff origins.
Competitors weren't impressed with the ILEC filings. "The Bells’ arguments are as old as monopoly tactics that attempt to block, delay and kill competition,” emailed Incompas CEO Chip Pickering. “Business customers want a choice for broadband service that is both affordable and flexible. Hundreds of businesses have called on the FCC to preserve competition, and over ten thousand have signed our petition demanding broadband choice."
Sprint said special access is a “key input” for both mobile and fixed broadband competition that would increase consumer choice and lower prices. It disputed ILEC “justifications for imposing lock-up provisions and other conditions” that it said thwart competition. “These companies claim their anticompetitive practices are commercially reasonable and that there are numerous alternative providers available,” Sprint emailed. “Not surprisingly, however, they fail to explain why local telephone companies continue to have an overwhelming control of the dedicated broadband access market some twenty years after their monopoly services were purportedly opened to competition.”
Level 3 welcomed the FCC’s investigation of the “anticompetitive” ILEC practices. “The ILECs have spent hundreds of pages trying to defend these practices, but the truth is simple: eliminating them, as Level 3 and others have long advocated, is a key step to create a more competitive industry, and fuel investment and innovation,” emailed Joe Cavender, Level 3 vice president-assistant general counsel, federal affairs.
Many were busy digesting the filings and preparing comments for the rulemaking, which are due Jan. 22. “There’s a boatload of stuff in [the ILEC filings]. Check back in a week,” said an attorney involved in the proceedings. Oppositions to the ILEC filings are due Feb. 5