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Study Posits Big Potential Costs of Special -Access Regs

A study just released by USTelecom suggests that extension of FCC special access broadband regs to IP delivery could cut economic output by billions, slash jobs and work against, not for, broadband buildouts.

Those special access regs require ILECs to make their business broadband lines available for lease by competing telcos (CLECs) , like cable operators, at reasonably comparable rates and conditions.

The study, from economist Hal Singer, extrapolates data based on fibering a building in Charlotte, N.C., and extrapolating to the entire country the depressing effects if the FCC extends legacy unbundling and price cap regs on incumbent telcos (ILECs) like UStelecom members Verizon. AT&T--from a copper-based past to an IP-based future.

According to that extrapolation, expanding the special access rules could "eliminate 43,560 jobs annually over a fiv-year period," cut economic output by $3.4 billion over the same period, and would mean 67,300 buildings would not supplied with fiber by incumbent telcos.

That is measuring the absence of fiber build-outs that will be discouraged by the FCC regs.

"If an ILEC seeks to replace its copper-based connections to a business, it now faces a fresh disincentive to invest  in fiber, in that the wholesale-access requirements will extend to its Ethernet services provided over a fiber-based network," the study said.

That, the study says, is "inconsistent with the FCC’s Congressional mandate to expand broadband deployment." 

That is among the key takeaways, as is that there are definite economic tradeoffs to the FCC's stated desire to boost broadband buildouts via extending or expanding special access regs to IP, including, ironically, potentially depressing investment in deployment it is trying to stimulate.

Singer is principal at Economists Inc., adjunct professor at Georgetown’s McDonough School of Business, and a Senior Fellow at George Washington’s Institute for Public Policy. USTelecom funded the study.