CLECs Seek Mechanism to Reduce ILEC Special Access Rates
January 16, 2014 | by Andrew Regitsky
While the industry awaits the upcoming January 30, 2014 FCC meeting in which it is expected to create the roadmap for moving to the all Internet Protocol (IP) network, CLECs continue to pressure the Commission to take immediate action to reduce ILEC special access rates. Although the venue they would like the Commission to use to take such action is unclear.
The latest CLEC salvo came from Sprint, which this week delivered an ex parte presentation to the Commission claiming that AT&T and Verizon were using their special access market power to increase special access rates. (For example, AT&T’s proposal to eliminate its five and seven year special access term discounts would result in price increases for its special access customers) In addition, the ILECs continually impose terms and conditions designed to “strangle any competition that might emerge.” Such terms and conditions include excessive early termination liabilities, excessive shortfall penalties and excessive circuit migration charges.
Sprint argues that the Commission must make three necessary and simple reforms now:
- Fix the Pricing Flexibility Competitive Triggers – to reflect actual competition
- Lower Prices
- Address Anti-Competitive Terms and Conditions
But while it is easy for CLECs to state their problem with ILEC special access rates, it is much more difficult to provide the Commission with a way to take immediate action. Here’s why.
The most immediate step the Commission could take would be to reject AT&T’s attempt to eliminate its long-term special access discounts. This tariff filing is already suspended for five months while the Commission investigates its legality. However, if AT&T correctly followed the price cap rules, which it undoubtedly has, there is no legal justification for the Commission to stop the filing in the long run. Any attempt to do so would be defeated in court.
The Commission could reduce ILEC special access rates as part of its market analysis of the special access market. But that analysis cannot begin until the Commission collects the data from its special access data request. And that request continues to await approval from the Office of Budget Management and has been further delayed by challenges from cable companies seeking to reduce the amount of data provided. A resolution to this proceeding is probably years away.
Finally, the transition to an IP network will give the Commission yet another way to control special access rates, as it may seek to impose rules to keep rates in check as carriers move to Ethernet or other IP replacement services. However, any such price control requirement would have to have a legal basis and as the rules stand today, there does not appear to be any obvious legal justification for freezing special access rates.
Thus, while CLECs and other special access customers can make a strong case that current ILEC special access rates are too high and may include anti-competitive terms and conditions, it is unlikely that they will find any relief from the FCC in 2014.
By Andrew Regitsky, President, Regitsky & Associates
