Amid complaints of unfair contract terms, the FCC has initiated an investigation of AT&T, Verizon, CenturyLink and Frontier practices in selling special access in the $20 billion business broadband market.
According to the FCC, the complaints and evidence point toward potentially unjust and unreasonable practices in setting pricing terms and conditions for special access, noting that “substantial questions of lawfulness exist that require further investigation.”
Specific complaints allege that “all or nothing” plans requiring competitive operators to purchase all special access from one incumbent in each market can be “problematic.” Competitive local exchange carriers (LEC) also complain that required percentage commitments instead of traditional volume discounts don’t reflect scale economies and are based more on competitive LECs agreeing to be loyal to incumbents rather than buying high volumes.
The FCC is also investigating the use of early termination terms in special access agreements.
Frank Simone, AT&T’s vice president of Federal Regulatory, called the FCC’s order to investigate “perplexing” because of the levels of competition he sees in the marketplace.
“Opening a tariff investigation on special access services is a step towards rate re-regulation in a space that is highly competitive and getting more so as cable companies and other new entrants aggressively compete,” Simone wrote in a statement. “The terms the Commission is reviewing are commonplace in most commercial contracts and in fact are being used by our competitors in their own contracts. Each day the Commission wastes investigating and interfering in commercial agreements between companies that build infrastructure and those that do not is a day it is not encouraging fiber investment or looking boldly towards the benefits those investments will provide to consumers.”
Sprint, on the other hand, cheered the FCC’s efforts.
“These harmful lock-up and penalty provisions not only harm competition, the high prices they protect are slowing the transition to an IP world. For the nation to realize the benefits of real choices and lower prices for broadband services, the FCC must take steps to address the stranglehold a few companies have on these basic inputs,” Sprint said in a statement.
“We believe the FCC probe will confirm how market failure in the $40 billion dedicated broadband access space has enabled a few powerful firms to leverage their dominance to extract excessive fees as part of anti-competitive contracts. Sprint appreciates the agency’s efforts to bring this costly market abuse to light so that corrective measures soon can be implemented in furtherance of the nation’s broadband goals and U.S. competitiveness overall.”
Filed Under: Industry regulations
