Roll Back All Pricing Flexibility Grants, Coalition of Special Access Purchasers Says
A special access order on circulation at the FCC would put on hold the current pricing flexibility petitions while the commission contemplates how to fix what they call a “broken” system, but that doesn’t go far enough for members of the NoChokePoints Coalition. The group of CLECs and enterprise customers wants all the findings of pricing flexibility granted since 1999 rolled back, so the FCC can take a fresh look at things and determine whether competition actually exists in those metropolitan statistical areas where flexibility was granted, the coalition told reporters Thursday morning.
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NoChokePoints says special access prices are inflated wherever ILECs have pricing flexibility, sapping their ability to effectively run their businesses and contribute to the economy. The businesses “literally can’t hire people,” said Colleen Boothby, who represents the Ad Hoc Telecommunications Users Committee, a group of enterprise purchasers of telecom services. “It’s money they don’t spend on factories and new offices and employees. It actually affects their ability to hire people and expand their operations."
A Verizon spokesman called the suggestion to roll back the grants of pricing flexibility “entirely inappropriate.” There is robust competition in the high-capacity services space, and many players, including cable, CLECs and others, offer services that compete with special access, said Ed McFadden. “This is just another example of NoChokePoints trying to pressure the FCC into acting before it gets the competitive data it needs to evaluate what is really happening in the market and to make an informed data-driven decision. Instead of calling for the FCC to take actions that are wholly unsupported by a market analysis, the NoChokePoint members should use their resources to provide the data the FCC has repeatedly requested of them."
"Their proposal would roll back 190 markets so that we could then go and litigate them. I'm totally opposed to that,” said Robert Quinn, AT&T senior vice president-federal regulatory. “I don’t believe they've presented any evidence in the record to support that."
To NoChokePoints, the evidence is clear. A NARUC-sponsored study by the National Regulatory Research Institute and a study by the U.S. Government Accountability Office have confirmed there’s inadequate competition in markets where pricing flexibility has been granted, said Paul Margie of Wiltshire and Grannis, which represents Sprint. AT&T and Verizon control about 90 percent of the DS-1 and DS-3 markets across the country, areas where there is no competition and they can charge “incredibly high prices and incredibly high rates of return” and anti-competitive terms and conditions, Margie said. “If you've got to subsidize a 100 percent rate of return, that’s sapping your resources to create jobs."
The current rules are producing “very screwy results” in both directions, said Thomas Jones, counsel for tw telecom. “It’s pretty clear that something is wrong here” when big ILECs can’t get relief in New York City but they can in Flint, Mich., he said.
AT&T thinks policy makers should be focused on how to make the transition to an IP infrastructure. The IP transition will bring investment and job creation with the purchase of hardware and laying of infrastructure. The CLECs are demonstrating the “weak commitment to infrastructure deployment” that President Barack Obama has mentioned, Quinn said. “That’s how they're going to create jobs -- building out infrastructure to offices."
But it takes a long time to build out fiber, and in the meantime the CLECs are getting squeezed, Jones said. In a good year, tw telecom will build fiber to perhaps 1,800 of its 16,000 buildings, but it will take years to “make a dent” in the 3 million commercial buildings across the country. “It’s going to take a long time,” Jones said. “I am certainly going to be dead."
Ideally, the FCC should correct existing prices “in places where they've already received pricing flexibility,” said Margie. “Bring those prices … back under the price cap regulation.” Deny the pending petitions without prejudice, so that AT&T and Windstream can refile “once we have rules that are rational,” he said.