Broadband Providers Fight Over Special Access Rates

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A coalition of carriers oppose a proposal that Verizon and Incompas made to the FCC as the agency considers a rulemaking about special access services. The group, called Invest in Broadband for America, says the agency should reject the proposal that would “cripple” investment in the business broadband market.

In FCC parlance, special access is the non-switched transport of voice and data over a dedicated transmission line between two or more designated points. For example, wireless providers use high capacity special access lines to send voice and data from cell towers to their mobile switching center where the call is then switched to the sender’s intended recipient. Consumers, small businesses, government offices, hospitals, medical offices, schools, libraries, ATMs and credit card readers use special access to connect to a dedicated network or to an internet service provider to complete the transmission.

The Commission is reviewing its special access services rules to ensure they promote marketplace competition and investment. 

Incompas, formerly Comptel, is a trade association representing companies that offer broadband voice, video, internet and data, using both wireline and wireless networks.

In Commission records examined by Inside Towers, Verizon and Incompas representatives recently met with members of the FCC’s Wireline Bureau and General Counsel’s office and told them the proposal focuses on a “three-tiered approach to the competition test and the need for a one-time adjustment” to certain rates in areas “and the need for an Ethernet benchmark in relevant markets that are insufficiently competitive.”

Verizon and Incompas told the Commission: “The FCC would apply the benchmark to constrain prices and ensure that providers could not abuse their market positions by imposing rates, terms or conditions that are unjust or unreasonable. The benchmark would be adjusted each year to ensure that rates are reduced over time.”

Founding members of Invest in Broadband for America are: CenturyLink, Cincinnati Bell, Inc., Consolidated Communications, FairPoint Communications, and Frontier Communications. They say the FCC has used flawed data to come to some conclusions about how to change the rules governing the business broadband market and they want that data corrected. Cable providers Comcast, Time Warner Cable, Charter, and Cox filed corrected data this week that the carriers say more accurately reflects the healthy competitive landscape in this market.

This data proves the cable footprint is 22 times greater than what the FCC is currently using in its analysis, according to the coalition.

Why is this important? Because if infrastructure providers “are forced to cut their rates at the behest of this misguided plan, they will be forced to cut hundreds of millions in future investment needed to build and upgrade network facilities, which would slow the deployment of broadband to areas that need it the most” — rural markets, says the coalition.

Cable’s capital investment in the last two years – 2014 and 2015 – was estimated at $6 billion and competitive fiber providers invested an estimated $9 billion during that same time for a total of $15 billion in competitive investment. As a result, the cable industry has seen business revenues increase from nearly $4 billion in 2009 to $14 billion in 2015. This level of investment would plummet if the FCC proceeds with its current proposed regulation, says the coalition.

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