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FCC Investigating Multi-Year Special Access Contracts

The FCC has launched an investigation into the tariff practices of AT&T and Verizon for special access service, the business-class broadband nets that those companies are required to share with competitors, like cable operators.

The FCC is looking at multi-year contracts, which critics of the practice call lock-up plans.

AT&T VP of federal regulatory Frank Simone called the move "perplexing" given that Wheeler has talked about the need for the FCC to intervene decreasing in a competitive market. He called the investigation a waste of time.

"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," he said. "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.”

USTelecom, whose members include those investigation targets, was not pleased, taking a swipe at cable in the process.

“Although the FCC says that it wants to be a data-driven agency, promote facilities-based competition, and incent broadband investment, it just can’t seem to get beyond its telephone-era mindset when it comes to regulating 20th century legacy services," said USTelecom president Walter McCormick. "The future of the business services market is in advanced, IP-based high-speed networks that are offered today throughout the nation on a competitive basis by cable and others who can provide service under private contracts that are exempt from regulation. Yet, at the very time the commission is expressing concern over the growing dominance of cable in the overall broadband marketplace, and acknowledging that burdensome legacy regulation of telecom companies is misdirecting investment and hindering competition, it launches an old-fashioned “tariff” investigation of the only competitors in the marketplace who are required to operate under last century’s antiquated rules. While we are unconcerned by what the investigation will show, as the longstanding terms and conditions contained in the tariffs are fair and lawful, we think the launch of this costly investigation is contrary to the public interest and the commission’s oft-stated broadband modernization policy objectives.”

But some competitive carriers and others were celebrating.

“Competition is driving other markets forward, but the large incumbents lock up actions prove they are steering the business broadband market backward," said Broadband Coalition spokesperson Jeff Sharp. "It’s time for the FCC to step in and end these anti-competitive tricks and speed the transitions to advanced broadband networks. We commend Chairman Wheeler for his commitment to addressing anti-competitive lock up provisions.”

“Almost every American relies upon these high-capacity, ‘special access,’ broadband lines each day – usually without even knowing it. But, the only thing ‘special’ about them is that the two biggest providers ‘lock-up’ their customers into long-term, exorbitant contracts, preventing them from seeking alternative choices and using innovative new products," said Computer & Communications Industry Association Ed Black. "CCIA applauds the FCC and especially Tom Wheeler, its chairman, for looking into lock-up agreements, which stifle innovation and ultimately hurt consumers.”

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.