AT&T Hits FCC Special Access Proposal as Harmful for Broadband Investment

AT&T objected to FCC Chairman Tom Wheeler's proposed special access overhaul, suggesting it would increase regulation and decrease broadband investment and deployment. AT&T's top lobbyist said further investment in broadband facilities for 5G and in rural areas is needed. "But imposing regulation on special access prices and contract terms is not going to produce it," Jim Cicconi, senior executive vice-present-external and legislative affairs, said in a statement Tuesday responding to Wheeler's remarks to the Incompas Policy Summit Monday (see 1604110065). "The entire notion that more layers of FCC regulation will yield more broadband investment is absurd on its face, and proves that this FCC remains ‘an economics-free zone.’ The Commission’s proposals will instead lead to far less investment in broadband infrastructure -- especially in rural areas -- the very opposite of where we should be going as a nation." The FCC didn't comment Tuesday.

AT&T and other incumbent telcos had been silent since Incompas and Verizon proposed in a letter Thursday the FCC adopt a new "technology-neutral" framework for special access (see 1604070069). Wheeler circulated a draft Further NPRM and ILEC tariff investigation order the same day and placed it on the commission's tentative agenda for the April 28 meeting. In a blog post Friday, he highlighted the principles behind the draft item's proposed new approach to "business data services" (BDS): promoting competition, technological neutrality, the IP transition, and market-consistent regulation, including through detariffing of all BDS offerings (see 1604080011). While ILEC competitors and Verizon welcomed Wheeler's proposal, cable representatives have voiced concerns about possible special access regulation of their industry [see 1604080055 and 1604110030). CenturyLink, Frontier, NCTA and USTelecom didn't comment.

Cable "absolutely" should be worried about the FCC's direction, said Robert Mayer, USTelecom vice president-industry and state affairs, at a Practicing Law Institute conference Tuesday. Telco and cable interests have increasingly aligned on special access regulation, but unlike telcos, which have dealt with such regulation for decades, cable hasn't been regulated, he said. So it would "not be trivial" if cable is suddenly subjected to special access regulation, including of its Ethernet services, he said: "Cable has every reason to be concerned about that." Mayer said he expects the FCC to act on special access by a 3-2 vote.

It's notable that Verizon said it wouldn't oppose undoing some deregulation of its business broadband services, said Willkie Farr attorney Thomas Jones, who represents CLECs. He said Verizon won sweeping business broadband relief from common carrier regulation when one of its forbearance petitions was deemed granted after the FCC deadlocked 2-2 and couldn't issue an order. He said Verizon is now suggesting it could live with those services being regulated under common carrier rules. Subject to certain clarifications under Title II of the Communications Act, Verizon said it wouldn't oppose being placed "on the same footing" for Ethernet services as cable companies, CLECs and other ILECs that received forbearance relief from dominant carrier regulation.

U.S. inaction on special access for 14 years has "set a terrible example for the rest of the world," said Sheba Chacko, BT Global Services chief regulatory counsel. "It's been a source of puzzlement and a source of confusion that the U.S. took this long to come to grips with the BDS market" by "using hard data rather than sound bites from one side or the other." She welcomed Wheeler's recent moves: "We're really supportive of the FCC's approach."

FCC-collected data show 77 percent of buildings have only one facilities-based provider and 98 percent have only two providers, said Joe Cavender, Level 3 vice president-federal affairs. That is despite Level 3 investing heavily in fiber that connects about 3,000 buildings a year, bringing its total reach to 30,000 connected buildings in the U.S. and 42,000 worldwide, he said. "It's going to be a long time until every location has a robust set of options to choose from," he said. Mayer said it wasn't settled that buildings were the relevant market because many had fiber nearby. From the ILEC perspective, the data show 95 percent of census blocks have competitive facilities, and those contain 99 percent of the country's business establishments, he said. But Jones said there are more than 1 million business buildings in the country and noted Level 3's addition of 3,000 connected buildings per year. "At that rate, we'll all be dead" before they're all connected, he said.