Cable Group Opposes CLEC Proposals for Special Access Rate Regulation; Replies Filed

The FCC should resist calls for major special access regulation and uphold incentives for facilities-based competition, NCTA said Friday in a filing weighing in for the first time on the agency’s broad review of the business telecom market and its regulatory framework. The cable group expressly called on the commission to reject “CLEC proposals for substantial new rate regulation.” Meanwhile, CLECs and others continued to make arguments for the FCC to bolster special access regulation, while ILECs opposed those calls. Many parties filed detailed reply comments due Friday in docket 05-25 responding to initial comments (see 1601290053, 1601270072 and 1601260056).

NCTA voiced concern about proposals for “unnecessary rate regulation” in areas where cable operators and other competitors had built facilities serving business customers. The group said the current regulatory framework had facilitated cable entry and expansion in the business market, and it urged the FCC to “take great care to ensure that any changes it makes to that regime both preserve and enhance incentives for facilities-based competition and investment.” The key for the commission, is to “focus on identifying, at an appropriate level of granularity, geographic areas where there has been, or likely will be, facilities-based competitive entry,” NCTA said.

The cable group disputed the market analysis of CLECs and said the FCC should reject their rate regulation proposals. “The CLECs wrongly argue that ILEC rates should be presumed unreasonable because ILECs purportedly have market power in the vast majority of commercial buildings in the United States,” NCTA said. “The analysis provided by the CLECs in support of this conclusion is unconvincing. When the Commission considers the availability of competitive fiber that has been deployed in census blocks where there is demand for special access services, it is clear that a different approach is warranted.”

NCTA knocked CLEC proposals to require three or four facilities-based providers in a building “as a prerequisite to deregulation” in the special access market. “Where an incumbent LEC's rates are constrained by the presence of a competing facilities-based provider in a particular area, there is no basis for concluding that wholesale providers are somehow entitled to even lower rates just because a third or fourth provider has not entered the market,” the groups said, rejecting calls for “rate regulation that purports to represent the workings of a hypothetical competitive market in any area where the rates already reflect the existence of real world competitive entry.” It also said, “the premise that competition between two or more facilities-based providers is sufficient to ensure that rates will be reasonable under Section 201(b) [of the Communications Act] has been a cornerstone of the Commission’s high-cost universal service regime for years.”

CLECs and their allies took aim at ILEC arguments that the business market is competitive. “The incumbents’ make the absurd argument that if a competitor has a facility in an area (such as a zip code or census block), regardless of the extent of connections to locations, there is competition,” said Incompas, a trade group representing CLECs and others. “This is a definition of competition only an incumbent could conjure up, as it has little or nothing to do with whether or not a consumer has a choice in providers.” Incompas said there was “an urgent need for the Commission to adopt reform in the special access market to ensure competitors access to last-mile facilities at reasonable rates, terms and conditions -- regardless of the electronics on those facilities.” Sprint, various CLECs, consumer advocates and others filed comments supporting greater FCC regulation.

ILECs and their representatives filed replies opposing the regulatory calls and stressing the strength and growth of business market competition. AT&T called CLEC analysis of sensitive industry data the FCC had collected “fatally flawed” and said “it could not lawfully be used as the basis for regulation.” CLEC proposals “would be massively impractical and would achieve no competition-related gain,” said AT&T, which also opposed any FCC re-imposition of rate regulation on IP-based special access services. CenturyLink, Frontier, Hawaiian Telecom, ITTA, Verizon and USTelecom also filed replies.