There is an interesting battle raging at the FCC between Level 3 on one side and AT&T, Verizon, CenturyLink and Frontier (ILECs) on the other regarding whether the data collected in the global special access investigation can be used in the Commission’s new investigation into ILEC special access optional payment plans (OPPs). The outcome could effectively delay the resolution of both proceedings or ensure a lengthy court fight. Here are the details:

On October 23, 2015, the ILECs filed a Joint Motion to modify the protective orders in the global investigation to permit parties to use confidential data submitted in that proceeding to become part of the investigation into their OPP plans. The ILECs, also suggested that, as an alternative, the Commission could simply combine the two dockets to allow parties to the tariff (OPP) investigation to draw on the entire record in the global proceeding, including the data collected.

According to the ILECs, they need the data in the overall special access investigation to defend their optional payment plans.

Although these data may not be sufficient to resolve the issues raised in the tariff [OPP] investigation, as the Commission posits, they are clearly relevant to the substantive issues raised in the investigation. The data are likely to include relevant information about the state of competition in the marketplace, the impact of specific contract terms on such competition, the extent to which competitive providers use contract terms similar to ILECs, as well as potentially other matters. These data are therefore necessary to the ILECs’ defense in the tariff investigation, and the Commission should accordingly modify the protective orders in the rulemaking proceeding to permit parties in the tariff investigation to use that data in defending their tariffs (Docket 05-25, ILEC Joint Motion, filed October 23, 2015).

The Joint Motion was opposed by Level 3.  In a letter to the FCC on November 3, 2015, the CLEC explained why:

The [FCC’s Wireline Competition] Bureau should deny the incumbent LECs’ motion because the Bureau already appropriately defined the information necessary for the tariff review in the [OPP] Designation Order, additional information from the rulemaking is unnecessary to the resolution of the tariff review proceeding, and adding that information to the record in the tariff review proceeding would be affirmatively harmful. Indeed, granting the incumbent LECs’ motion would no doubt increase the costs and burdens on other parties and the Commission and it would risk delaying resolution of this important proceeding—consequences the incumbent LECs would no doubt welcome, but against which the Commission should guard. The tariff review proceeding and the rulemaking proceeding address different issues. The tariff review proceeding is narrowly focused on addressing the unreasonable and anticompetitive terms and conditions of certain incumbent LEC pricing plans applicable to special access services for which the incumbent LECs are classified as dominant.  In contrast, the rulemaking proceeding is focused on identifying the relevant special access markets in which incumbent LECs have market power, and adopting appropriate price regulation and pricing flexibility rules in light of that analysis (Docket 05-25, Level 3 Letter filed November 3, 2015 at. pp. 2-3).

The ILECs responded to Level 3’s letter on November 12, 2015, making it clear to the Commission that any conclusion it draws in the OPP investigation will be challenged in court if the data from the global special access investigation is not included in both proceedings.

The Commission would commit reversible error under any standard of review if it prevented the ILECs from using the special access data collection in defense of their tariffs or otherwise challenging the Commission’s reliance on those data. Level 3 strains to avoid this conclusion by attempting to argue that the data the Commission has collected in the special access proceeding concerning competition is not relevant to the issues designated for investigation in the tariff proceeding.  But the relevance of the data is obvious. The tariff proceeding is based “on the record generated in the Commission’s special access proceeding,” including the CLECs’ allegations that the ILECs’ special access tariffs contain provisions that prevent CLECs from purchasing special access services from competing, non-ILEC providers. Accordingly, the facts concerning the overall competitive context in the special access marketplace and the extent to which CLECs do or could purchase such alternatives are central to the issues raised in the Designation Order.  The ILECs do not have those data solely within their possession. Indeed, that is why the Commission conducted the broader, mandatory data collection in the special access proceeding that forced the CLECs to submit information concerning their own operations and purchases, including purchases made pursuant to the terms and conditions that are the subject of the tariff investigation. That data collection is already complete, and the Commission has made data available for review. Accordingly, there is no logical or lawful basis to deny the ILECs’ motion.  Level 3’s opposition demonstrates yet again that, although the CLECs continue to hurl accusations about the supposed effects of ILEC tariff provisions on competition, they do not want those accusations tested against the actual marketplace data (Docket 05-25, Joint Reply, filed November 12, 2015, at pp 1-2).

The ILECs want the collected special access data to be used in the OPP proceeding for at least two reasons. First, they believe that the CLEC data in the global investigation will demonstrate that special access is competitive and growing ever more competitive each day. Thus, inclusion of this data would provide evidence that specific OPP plans are not hindering competition in any meaningful way. 

Second, as Level 3 points out, combining the voluminous data already collected into a form that could be used to evaluate specific optional payment plans could further delay both proceedings. The global investigation is already delayed because the Commission is having great difficulty determining how to evaluate the massive amount of data collected. This would only worsen things.  A delay would be the advantage of the ILECs since their highly profitable special access services would continue without fear of additional regulation.

The ILEC’s threat to appeal an unfavorable decision in the OPP investigation without inclusion of the collected data means the Commission has little choice but to acquiesce to their demands.  But inclusion could work to the Commission’s favor.  While it would undoubtedly slow both investigations, it would strengthen the Commission’s hand in a court appeal of either proceeding. Moreover, the ILECs are correct that an investigation of ILEC OPP plans cannot be artificially isolated from how CLECs are performing in the overall special access market. 

The logical action would be to combine the two proceedings. ILECs would be able to use actual market data to make the strongest case for their OPPs and the FCC would have its best defense for any regulatory action it ultimately takes. Thus, ILECs could win in the short term, but end up losing in the courts.

By Andy Regitsky, CCMI