FCC Shouldn’t Adopt De Minimis Exemption to Special Access Mandatory Data Request, AT&T Says
AT&T said the FCC should reject CLEC proposals to adopt a de minimis exemption to the upcoming mandatory data request on the special access market (http://xrl.us/bnrhym). The proposals would exempt providers with less than a certain number of facilities-based building connections in a market from having to provide data. Several CLECs had made the requests, arguing an exemption could ease the burden on small companies whose data would be of little use to the commission’s analysis.
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Such an exemption would “greatly understate” actual competition, by excluding many connected buildings that collectively represent a substantial percentage of the special access revenue in any metropolitan statistical area, AT&T said. For example, in San Francisco the “vast majority” of demand for AT&T’s DS-1 and DS-3 circuits is in about 1,000 buildings, the telco said. But even tiny competitors focus on the largest buildings, and compete for a “disproportionately large” amount of special access demand, AT&T said. The concerns are “not merely theoretical,” and San Francisco is not unusual: An examination of all MSAs covered by the commission’s previous voluntary data requests, plus San Francisco and San Antonio, “confirms that exempting CLECs with 10 or fewer buildings would exclude, on average, about 200 CLEC-connected buildings in each market,” AT&T said.
"De minimis exemptions are everywhere,” said Colleen Boothby of Levine Blaszak, who represents high-volume corporate customers of special access services: “There’s nothing sinister here.” Boothby called it a “routine administrative practicality” to have a “reasonable minimum” to trigger reporting requirements. “By definition, a de minimis exemption only affects companies that are too small to drive the market,” she said.
The American Cable Association was the latest group of CLECs to make the request, telling Wireline Bureau staff Friday there is “no reason to burden smaller entities that are insignificant participants in the market” (http://xrl.us/bnrivb). Last month, TDS Metrocom urged bureau officials to “consider the burden of detailed requests on small companies,” arguing it would take “significant resources” to review multiple data sources and compile the requested information (http://xrl.us/bnrivm). CompTel also last month expressed support for a de minimus standard (http://xrl.us/bnrivq).
AT&T argued a de minimis exemption would fail to account for “forward-looking market dynamics” because it would be based on a “snapshot” of the number of buildings currently served in a market regardless of the size of the competitor in other markets. AT&T pointed to a hypothetical entry of tw telecom -- a “large, well-funded competitor” -- which might not be counted if it “has just recently entered a particular” city and connects to only a few buildings there.
AT&T is demonstrating “serious chutzpah” in insisting that the commission use forward-looking data, Boothby said. “Basing today’s regulation on predictions about competition emerging in the future is what got us in trouble in the first place.” The FCC deregulated special access based on ILEC claims that competition was “sure to develop soon,” she said. “And then it didn’t."
Any exemption based on the number of buildings served would “fail to take into account how competition actually occurs,” AT&T said: Special access competition occurs not just between providers that have an existing connection to a building, but between companies that deploy “large fiber rings” and can then bid on customers in buildings located near their networks. An exemption would exclude entire fiber networks from the analysis, understating the number of active customers, AT&T said.
"I love all the talk about fiber rings,” Boothby said, pointing to the Unbundled Network Elements rate proceeding, in which SBC filed maps showing all the fiber rings in San Francisco -- but those ring owners were “completely dependent” on SBC’s special access services to connect customer locations to the ring. Fiber rings “tell us nothing” about ILEC monopolies on channel terminations -- the “final mile” connections to the customer premise, Boothby said. Following a merger, SBC is now AT&T.
A Sprint spokesman said that according to the latest FCC data, AT&T, Verizon and CenturyLink control more than 95 percent of the $18 billion special access market; CLECs have about 5 percent. “The notion that this mandatory data request cannot go forward without collecting data from carriers that represent at most a fraction of a percent of the market is absurd,” the spokesman said. “Surely the nation’s largest landline companies don’t seriously expect anyone to believe that these small carriers are dictating their pricing decisions.”
The state of competition in the special access market has repercussions outside the U.S., said BT executives. Chairman Mike Rake told FCC Chairman Julius Genachowski and Wireline Bureau Chief Julie Veach Friday that BT needs “fairness and a level playing field” in U.S. special access services to compete in the global managed network services market. Rake thanked them for “progressing the Commission’s review” of the special access market, BT’s ex parte filing said (http://xrl.us/bnris7).