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FCC Special Access Call Continues to Draw Crowd

The FCC's party line vote to suspend its deregulatory
triggers for special access (broadband business service) prices continues to
draw both fire and fans from industry.

"With this action, the FCC has done right by consumers,
and it's taken a first step toward promoting competition in wired and wireless
communications," said Public Knowledge senior staff attorney John
Bergmayer. "While consumers don't pay high special access fees directly,
they still bear their cost. When competitive carriers have to pay unreasonably
high rates for connectivity they may have to pass the costs along to users, or
slow down new deployment."

COMPTEL, whose independent telecom members have complained
about price increases for access to major carriers' plans, were all for the
moratorium, as well as for suspending the dereg triggers before it has
collected industry data on the competitiveness of the market, the latter which
was roundly criticized by the major carriers, FCC and Hill Republicans and
various industry groups.

"We commend the Commission for taking this important step in
developing pro-competitive policies for the broadband market," said
COMPTEL CEO Jerry James. "For years, COMPTEL has advocated that the
framework for pricing of special access is broken and reform was long overdue.
With this order, the Commission acknowledges that changes must be made in order
to ensure that businesses across America can continue to benefit from
competition and the innovative broadband services our members provide." He
added: "We appreciate that the Commission has suspended its pricing
flexibility standards as it prepares to further collect and examine industry
data that will provide a true picture of the market."

Not so appreciative of that suspension was AT&T, among
those whose petitions for deregulation are now in limbo. While the company said
the mandatory data collection was necessary, to suspend the triggers before it
determines the current state of competition for the services was putting the
cart before the horse.

"If, as the FCC itself stated earlier this year, it
does not have the data to support ‘claims that special access rates are
unreasonable,' then suspending the existing triggers seems premature,"
said AT&T senior VP Bob Quinn in a statement.

"[I]f the FCC's aim is to revisit its prior pricing
flexibility decisions it is committing increasingly scarce staff resources to
re-review 250 market areas," said Quinn, "a process that took the FCC
over a decade to complete the first time around.  And, this re-review
could conservatively grow to 500 market areas or more, if the size of the
market area is reduced, as reports indicate. The end result of which is a
mountain of work designed to set the price for a relatively low-speed business
service that does not even meet the National Broadband Plan's definition of broadband
in the consumer market."

"The FCC has talked about its priority being to drive
more and faster broadband to more Americans.  Yet, the FCC's most recent
action does nothing to promote broadband and instead has the potential to
divert capital expenditure away from investments in next generation network
infrastructure," blogged Leslie Marx, Duke University econ professor and
former FCC chief economist under chairman Kevin Martin.

Walter McCormick Jr., president of USTelecom, which
represents major telecom providers including AT&T, Verizon and CenturyLink,
shared those concerns. "We are disappointed that the Commission has chosen to
take this action despite its recent repeated admissions that it does not have
adequate information to evaluate the competitiveness of the high-capacity
services marketplace." he said.

Ditto Verizon in its statement from Donna Epps, VP of
federal regulator affairs. "While today's Order acknowledges that the current
rules fail to capture the full extent of existing competition, the FCC, before
taking any action, should have collected the data it repeatedly has said it
needs to evaluate the marketplace. There are many providers -- cable companies
and CLECs -- that compete vigorously with special access. Given this intense
competition, any efforts to impose new pricing regulation are unjustified and
will depress investment in these networks so critical to our economy."

The FCC has promised to begin the process of collecting the
data -- it will be a mandatory for telecom providers -- within the next 60
days. But given that the FCC's new paperwork requirements will have to be
vetted by the Office of Management and Budget, collection will likely not begin
for several months at the earliest.