While the FCC prepares for the release of its massive special access data request, parties on both sides of the special access pricing issue have ramped up their FCC lobbying. CLECs implore the Commission to take action now. They claim that they remain dependent on ILEC special access rates to reach many end users and there remain few or no alternatives in many parts of the country. CLECs contend that the Commission need not wait until it collects and analyzes special access data since that could take years.  Instead, they want the Commission to immediately reduce ILEC special access rates and eliminate unfair ILEC contract tariffs and optional payment plans that include terms and conditions that lock in customers, preempting competitors from even considering building their own networks.

ILECs of course argue precisely the opposite. They state that special access is a competitive and vibrant market and one in which they continue to lose market share. They emphasize that cable companies are continuing to ramp up their own special access alternatives with little acknowledgment from CLECs or even the Commission that cable companies are providing viable special access alternatives. ILECs are unanimous in their belief that the Commission should not prescribe any changes to special access until it concludes its market analysis. They remain confident that the analysis will demonstrate the special access market is growing and is filled with thriving competitors and, therefore, further regulation is not needed.

Even while special access pricing, terms and conditions are continually debated, two tangential issues continue to be competitively important to special access customers and suppliers. These issues were highlighted in an April 2, 2014 CompTel ex parte letter to the FCC in Docket 05-25 and have brought immediate ILEC responses. These issues are discussed below:

Copper Retirement – CLECs request the Commission to immediately suspend its existing copper retirement rules and modify those rules to promote the continued availability of affordable Ethernet-over-Copper services to small and medium sized businesses. Ethernet service is a growing alternative to special access. The current rules allow ILECs to remove copper loops even in locations where they are being used or could be used by a CLEC to provide service. Thus policy, according to CLECs, provides ILECs with uneconomic and anti-competitive incentives to retire copper before the end of its useful life. 

ILECs, state, however, that there is no basis for any change in the copper retirement rules. They claim that this would unfairly restrict their ability to choose the technologies to use to serve their customers.  Moreover, it would require only them to continue to maintain outdated facilities that would impose unnecessary costs, and discourage investment in broadband.

IP VoIP Interconnection – This is not a new issue.  However, it remains unresolved.  Thus, CLECs continue to lobby the Commission to immediately make clear that ILECs have a duty to provide IP interconnection for the exchange of  voice traffic over the Internet (VoIP interconnection) under Section 251(c)(2) of the 1996 Telecommunications Act.  In other words, make clear that the same interconnection requirements apply for both VoIP interconnection and circuit-switched interconnection. 

However, other than requiring ILECs to negotiate in good faith in response to requests for VoIP interconnection, the Commission continues to evade addressing this issue.  CompTel claims that ILECs are not negotiating in good faith and therefore, the vast majority of CLECs, have been unable to obtain VoIP interconnection agreements with the largest ILECs. 

ILECs such as Verizon maintain that they are always willing to negotiate commercially reasonable VoIP interconnection agreements.  Verizon argues that the main reason CLECs do not have these arrangements is because they are not pursuing them. The ILEC states it has negotiated VoIP interconnection agreements with Comcast, Vonage, Bandwidth.com, Millicorp, Intermetro, Broadvox, BrightLink and 365 Wireless.According to Verizon, Commission action on this issue is simply not needed since all parties have strong market-based incentives to enter into IP interconnection agreements for VoIP traffic, and it is reasonable to expect VoIP providers to negotiate in good faith and agree to interconnect.

Although lobbying on these issues continues, it is unrealistic to expect the Commission to take any action that could impact its analysis and conclusions in its upcoming special access market analysis. We continue to anticipate that the special access data request will be released by the Commission this year (probably in the fall). Therefore, all companies that will be required to submit data should ensure that they are ramped up and ready, since responding will be very time and resource consuming.

By Andrew Regitsky, President, Regitsky & Associates

Learn more about the FCC debate on Special Access