Stakeholders Lobby on State of Special Access Marketplace
The “glaring defect” in the FCC’s pricing flexibility rules is that they measure competition for end office services in order de-regulate transmission services, the Ad Hoc Telecommunications Users Committee, a group of enterprise purchasers of telecom services, told aides to Commissioners Mignon Clyburn, Robert McDowell and Jessica Rosenworcel last week. In other words, Ad Hoc said, “they take the cow’s temperature to see whether the pig is sick” (http://xrl.us/bnb5tp). Ad Hoc was just one of several groups showering commission staff with metaphors and academic papers to try to persuade them on the state of competition in the special access marketplace.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Because the rules measure competition for the wrong network element, they have blocked de-regulation in competitive markets and imposed it in non-competitive markets, Ad Hoc said. And those ILECs that have received pricing flexibility have used it to raise their prices, which shows that “either price-constraining competition is missing in those de-regulated markets or the ILECs believe that the best way to attract customers away from competitors is to raise their prices,” Ad Hoc said. “This pricing behavior is reason enough for the Commission to suspend the operation of the current rules pending investigation and more rigorous analysis."
Ad Hoc also questioned ILEC claims that DS-1 and DS-3 services are falling out of favor so rapidly that the commission cannot rely on the data it has already collected. The data filed by AT&T itself proves that such services “continue to dominate the product landscape and remain the essential (and most common) building blocks of enterprise customer networks,” Ad Hoc said in its letter, noting its own members have reported continued reliance on DS-1s and DS-3s in lieu of Ethernet. “In today’s economic climate, business customers cannot afford a regulatory regime that allows ILECs with market power to grossly overcharge for services that are critical inputs for every business in America,” Ad Hoc said.
BT urged an aide to FCC Commissioner Ajit Pai to vote to suspend the triggers and deny pending petitions while the commission develops a new framework, an ex parte filing said (http://xrl.us/bnb5px). “There is ample evidence in the record showing that the pricing flexibility triggers are broken,” BT said, arguing against claims that the DS-1 and DS-3 services are “obsolete.” BT’s global Fortune 2000 customers “rely on these inputs to connect their US sites to their global networks and are likely to do so for the foreseeable future,” the telco said. During the meeting, Pai’s aide asked for suggestions on which information should be part of the upcoming mandatory data request, BT reported. “Regarding AT&T’s claims that it would be unfair to suspend the price flex triggers while AT&T’s petitions for pricing flexibility are pending, BT would point out that it would be arbitrary and capricious for the Commission to enforce rules that it knows are broken."
Windstream asked officials to grant its pending pricing flexibility petition (http://xrl.us/bnb5rc). The telco met with Wireline Bureau Chief Sharon Gillett and an aide to Chairman Julius Genachowski Wednesday to argue its petition satisfies the collocation triggers in the rules, and the relief would benefit customers by allowing Windstream to offer lower prices than otherwise possible under existing price cap rules. A grant would also place the company on “a more level playing field” with other ILECs that have already received pricing flexibility in some of the same markets, Windstream said. However, Windstream’s petition “should not be viewed as an endorsement of the current pricing flexibility rules,” the telco said. Winsdtream asked the commission to grant all pending pricing flexibility petitions and ensure on an interim basis that carriers with Phase II pricing flexibility cannot increase their special access rates, pending the conclusion of more comprehensive special access reform. Windstream voiced support for data collection that will enable a full assessment of “competitive access issues."
Verizon executives met with Pai aides Thursday to express their concern that any order addressing the current pricing flexibility framework “could prejudge the outcome of the Commission’s ongoing analysis of the marketplace before the Commission has collected the competitive data it needs to complete its review,” said an ex parte filing detailing the meeting (http://xrl.us/bnbvxx). Verizon handed out a copy of an academic paper entitled, “Regulation in Financial Translation: The importance of current data in the FCC’s special access proceeding,” written by Anna-Maria Kovacs, visiting senior policy scholar at Georgetown University’s Center for Business and Public Policy. Kovacs wrote that before the FCC acts on special access, “it needs data that will enable it to understand the market, particularly the fiber-based IP and Ethernet market that is evolving to replace the obsolete TDM world” (CD June 5 p3).