ILECs Reject Petition to Apply Dominant Carrier Regulation to IP-Based Special Access Services
The petition, filed in November by Sprint Nextel, tw telecom, Cbeyond and others, seeks to reverse the FCC’s decision to refrain from applying dominant carrier regulation to packet-switched and optical special access services (http://bit.ly/11h6dWx). The CLECs had argued that, as a result of the commission’s decisions, ILECs are “essentially free to offer non-TDM-based special access services at any price and on any terms and conditions they choose.” As Ethernet special access service becomes the norm, “unreasonably high prices and anticompetitive conduct” by ILECs will “harm American businesses,” they said.
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AT&T encouraged the commission to “categorically reject” the effort, which it said would require the commission to ignore “overwhelming evidence of competition flourishing in the enterprise broadband market” (http://bit.ly/11h7Pzr). No one who filed comments in support of the petition could overcome its “fundamental legal shortcomings,” AT&T said: Under the APA, the commission could only reverse a prior grant of forbearance through a new rulemaking. “That defect is not remedied by the Petitioners’ attempt to shoehorn its request for relief into the pending Special Access Rulemaking,” AT&T said.
The enterprise broadband services marketplace is “robustly competitive,” said Verizon and Verizon Wireless (http://bit.ly/11hasRW). Level 3’s belief that high-capacity service providers are imposing unjust rates and terms “through confidential, unfiled contracts” -- which it can’t prove because the unjust contracts are “invisible” to outside parties -- is “no substitute for evidence,” Verizon said. Procedural grounds prohibit the commission from revisiting the Forbearance Orders, it said: Section 10, which deems a petition granted if it’s not denied within one year, “prohibits the Commission from reconsidering a years-old grant of forbearance.” Section 10 gives the commission authority to refrain from applying certain sections of the Communications Act to telecom services.
The petitioners say the procedural objections are overblown. The commission has “ample legal authority” to grant the petition without issuing a new NPRM, Sprint Nextel said (http://bit.ly/11haXeL). The ILECs got forbearance “prematurely, before meaningful, facilities-based, competition was able to take root,” Sprint said. Reversing forbearance doesn’t require an NPRM, said the CLEC, because forbearance proceedings are not formal notice-and-comment rulemakings: “It follows, therefore, that proceedings to reverse grants of forbearance do not require notice and comment rulemaking.” If the commission wants to find a rulemaking hook, it can do so in the context of a still-pending 2005 NPRM that sought comment on the proper regulatory treatment of non-TDM-based special access services, Sprint said.
The public network’s “natural evolution to IP” does not “magically” eliminate the “entry barriers and other brute economic realities that impede competition in the special access marketplace,” said the Ad Hoc Telecommunications User Group, which is a collection of purchasers of special access services (http://bit.ly/11hbfCj). “Now that IP is a familiar, almost commonplace technology for services like special access, the Commission should ignore the ILECs’ IP pixie dust and reverse its misguided forbearance decisions."
Little doubt exists that ILECs’ control over last-mile connections will stifle competition in the provision of Ethernet and other packet-based special access services, said BT Americas, CBeyond, EarthLink, Integra, Level 3 and tw telecom, in reply comments on their petition (http://bit.ly/11hbrkY). “Bedrock principles of administrative law mandate that an expert agency has the authority to change its regulatory regime in light of the circumstances,” the CLECs said. “The FCC has the authority to grant and reverse forbearance as it sees fit, subject to review by appellate courts."
But CLECs have actually gained considerable share in the IP-over-Ethernet special access business, said Anna-Maria Kovacs, visiting senior policy scholar at Georgetown University’s Center for Business and Public Policy. “Re-regulating that arena will discourage their further investment as well as investment by the ILECs,” she told us.
"The problem is that the commission has not had a cohesive analytical framework for granting forbearance petitions under Section 10,” said Phoenix Center President Lawrence Spiwak. It’s no surprise the CLECs have asked the commission to apply the traditional market power standard used in the Phoenix order, Spiwak said: That order is “an open door to more regulation.” Either the industry is going to come up with a regulatory framework that facilitates the IP transition, or it’s not, Spiwak said. “We're going to need a better framework than what’s in the Phoenix forbearance order.”