FCC Suspends Special Access Flexibility

August 24th, 2012 by · 18 Comments

Yesterday, just after I left on a trip (naturally), the FCC made a very important but still inconclusive regulatory move. In a party line 3-2 vote, the agency suspended the rules passed in 1999 that allowed incumbent providers flexibility in special access pricing.

Competitive providers have long complained that the competitiveness of the special market was being overstated, with competitive fiber-fed buildings vastly smaller than those of the incumbents. Pricing flexibility therefore has not been doing the job that it was intended for, and has led to less compeitition not more.

This is most obvious these days in the wireless backhaul market, in which Sprint and T-Mobile are at the mercy of their competitors AT&T and Verizon when it comes to backhaul, whether the latter two are taking advantage of the situtation or not.

For its part, Verizon says the FCC should have done more research first – kick the can down the road another year or two as usual. Now the shoe will be on the other foot, as the FCC will do more research second – and perhaps keep the new status quo until it is done. You know, another 13 years later or something like this past interlude.

The independent metro fiber business has been growing rapidly but is still a long ways from making a truly competitive market. That’s why tw telecom is cheering the decision, as their own extensive fiber footprint still leaves them dependent on off-net service from the incumbents to serve enterprises nationally even when they add 500 buildings a quarter.  BT also responded positively, as they also serve US customers via others assets and find the market distorted.

Categories: Government Regulations · ILECs, PTTs · Metro fiber

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18 Comments So Far


  • CarlK says:

    It looks like the regulators will not be tolerating voluntary submissions of the competitive landscape by important players who were not participating going forward. Within 60 days, their “mandatory” call to arms will provide the necessary data they have been requesting, and then, some “NEW STATUS QUO” will take hold. It was ironic to hear those imbeciles in Congress, err, the Finance Committee, talking about maintaining “The Status Quo.” Take your “STATUS QUO” and shove it!

    Hopefully, s “NEW STATUS QUO” will be one of investment, innovation, along with expansion for communication companies to make America competitive again with respect to the 21st Century and fiber finally providing speeds more resembling “the speed of light” for their consumers and businesses!

    By the way, BT seems to be the pot calling the kettle black here in the U.S., while they practice similar anti competitive polices and procedures over in their Mother England. Should we send them back to their HOMELAND, or should Big (3) take over another U.S. rooted company by the name of COLT with Fidelity inside?

  • Anonymous says:

    This is the most bizarre ruling. Although Price Flex was horribly flawed, this decision is about 10yrs too late to matter. The only folks that will make money on this decision will be outside counsel. They will promise players like Broadview, XO, LVLT, Sprint, T-Mobile, et al., that they can roll back the clock, get huge refunds from COs that should have never been given Price Flex relief. In the end, they’ll get nothing but a huge outside counsel bill.

    What’s next, deciding the Bell Atlantic-NYNEX merger wasn’t in the public interest?

  • Anonymous says:

    carl, please speak english. I’m convinced you actually think your meaningless drivel is pithy and insightful. It’s not. WTF does “Run Forrest, run” mean and how is relevant to either my comment or Rob’s post???

    yes, mike mooney is in-house counsel at LVLT. Of course, he’s going to pretend that anything that this do-nothing FCC does is meaningful even when it’s not. He’s going to gently stroke the FCC with a soft whip, as he does in his blog entry, but what he feels like saying is f’n moron’s waited 10 frigg’n years for this vapid decision?

    As I said above, only outside counsel will get rich on this one.

  • Fancy Pants says:

    Heh, for awhile I think we believed CarlK had finally taken his street-corner screeching about the evils of capitalism (except Level 3, of course, because they don’t do shady stuff) elsewhere. Get used to it, anon, its sort of a running joke around here that CarlK mumbles incoherently on occasion to educate us about wall street=bad, L3=good.

  • CarlK says:

    Anonymous, I am convinced that you are representative of “The Status Quo” leading this country into the abyss; therefore, your constant discounting of the continuous shift away from the handicaps which have weakened this nation in the “communications field,” is not at all interesting to me.

    From my perspective, the FCC seems to be getting it, and continues to move towards a much more business/consumer friendly environment predicated upon investment vs. stagnation, innovation vs. habit, and quality services which add knowledge and productivity gains everywhere vs. POTS! Is that plain enough English for you, you SOB?

    • anonII says:

      No this is not plain enough English because it makes no sense. Anonymous stated that the FCC decision was 10yrs late and only outside counsel would get rich on it. That’s it.

      You devined a subtext from the comment that is not at all related to the comment. Why don’t you respond to people’s written comments rather than the ulterior motive the voices in your head tell you to attribute to them?

  • Anonymous says:

    Fancy Pants, thanks. I should have known better than to get sucked into one of his silly meandering rants.

  • CarlK says:

    Bla, bla, bla. Who made Anonymous God incarnate?

    People everywhere are tired and bored with the Status Quo he speaks about, aka, The SOS! He/she believes the regulatory bodies remain beholden to this one percent group including their lawyers, even while we have seen the FCC, at least, working towards business and consumer friendly solutions for some time now. Thus far, I have been impressed with their decision making body’s democratic slant. Hopefully, that won’t “CHANGE” in November!

    Start thinking for yourselves, and cut your cable cords along with any other “DUMB EM DOWN” packages that these media titans would have you wastefully purchase in order to control the message in the privacy of your homes, stealing your time and weakening your brains as well as those of your children when doing so. You don’t have enough time in your lifetime to absorb all the crap they’re bundling through your home wires.

    If you choose to, go OTTV and watch Forrest Run at the same time he bought some shares in “Apple” during its nascent stage vs. the nose bleeding prices that those criminal operators on Wrong Street are throwing at you fools today!

    We need regulators to keep doing “bizarre” things as they shake up the system to make it more useful for society as we move forward.

    As for Apple, this dear price you pay for a bite of the them is not sustainable. The forces in motion including but not limited to gravity, will eventually take it down hard, after their next product cycle in the realm of VIDEO, err, Apple T.V., of course.

    http://movies.netflix.com/Movie/Forrest-Gump/60000724?country=1&rdirfdc=true

  • anonII says:

    This was a story about Special Access, nothing more. If you don’t know what special access is and/or can’t contribute anything constructive to the discussion about the specific story, please save your comments for your diary or your shrink.

  • Mike Mooney says:

    I do agree that the dialog here has gotten a bit off track, so let me see if I can foster a bit more productive discussion.

    I actually think what the Commission did here is meaningful for several reasons. Among them: First, while I agree that the FCC’s recent order on Special Access was a long time coming, the Commission is finally acting in an area that needs attention. Any activity here towards fixing what is so obviously broken is better than the status quo. Second, the Commission’s freezing of grants of further pricing flexibility means that the incumbents will not have the ability to seek even more locations in which they are free to set unregulated rates for special access in areas where, under the old, broken rules, competition (which is not really present) would have been presumed to be present so as to limit the incumbents’ pricing (and other) behavior. Where incumbents have the right to set rates at whatever levels they chose in areas where there really isn’t competition, the free market does not work particularly well. Third, because the Commission has recognized that the prior “triggers” we’re not effective predictors of where competition exists, I would think if the incumbents try to further increase special access rates where they already have pricing flexibility (having received it under the prior, flawed “competition predicting” process) that the Commission would closely scrutinize any such requests. Last, the Commission indicates in its order that it will continue to analyze the evidence in the record, and make further decisions based on that evidence. As Level 3 has noted in its blog and in our advocacy, we are hopeful that one of those orders is one limiting the incumbents’ use of anti-competitive demand lock-up arrangements. Have a look at footnote 15 of the Commission’s order in this regard. We will keep pushing for this. It would save us, and many other non-incumbents, a lot of money, savings we could pass on to our customers and ultimately American consumers. It would also enable us, and many other non-incumbents, to undertake even more facilities based construction. I have blogged on this before. http://blog.level3.com/2012/06/12/if-we-build-it-they-cant-come/. All of this would be very good for American consumers and businesses.

    In the end, there can be many winners here other than outside attorneys.

    Mike Mooney
    Level 3

  • Anonymous says:

    Mike, I certainly appreciate your optimism but my long standing history with state and federal regulators on issues, ranging from recip comp (now affectionately referred to as inter-carrier compensation), access reform (switched and special), OSS unbundling, local loop unbundling, UNE DS1s, POT bay disputes, physical vs. virtual colocation, dry copper, number portability, MTTRs on UNEs, to any of a number of issues tells me that this will not be resolved any time soon.

    Although many of the topics above were eventually decided in favor of CLECs, it took lots of money and resources to often get merely Solomonic outcomes . More importantly, many of those victories were at a time when regulators were competition-friendly in deed not just platitude.

    Price Flex was a joke in design. The underpinning regulatory rationale for it was beyond misguided and this should have been patently obvious to regulators the moment they saw special access prices rise or flat-line in COs deemed competitive. Adding insult to injury the ILEC consolidation made a mockery of price flex as did the telecom bust which saw many CLECs disappear whose footprints were earlier used by ILECs to justify price flex relief at specific COs.

    I’ll still bet outside counsel does better in this than anyone else. Time will tell. We’ll revisit this one in 10yrs. ;-)

  • anonIII says:

    Bingo. CarlK, the people on this website care about telecom for a lot of reasons, not just debate about who’s stock is or isn’t valuable/being manipulated/run by stupid managers. But everything you post is on one of those three subjects, and predictable to boot. Honestly, if you can’t find a blog that touches on those issues, create one yourself. Coming here is like having to walk by a raving lunatic on the sidewalk every day, just to get the mail. We’ve mostly learned to ignore it, but it’s still annoying.

  • Mike Mooney says:

    Anonymous,

    Commissioners McDowell and Pai (if you read their dissents (and you likely have)) agree with you–in too many cases, the Commission takes too long to act. However, suspending the broken rules is, in fact, action, and late is better than never.

    At the same time, the possibility that you are right and that the Commission may take longer than it expects to fully resolve things is why we, along with others, have advocated, and will continue to advocate, that the Commission can’t wait until the end to break the incumbents’ stranglehold on this market through their demand lock-ups. I will try to remember to post a link to our next filing at the Commission on these topics here for those interested.

    • Anonymous says:

      Mike, look forward to seeing your comments. In the meantime, I’m sure Andy L., Jonathan C. among many others are working the phones and starting the full-court press to turn up the pressure on the ILECs.

      I would imagine you guys will throw down a well choreographed two-prong attack — one commercial and one regulatory. The commercial approach will probably take the form of a carefully scripted letter from you or perhaps one of the non-legal types to T and VZ saying something like, “in light of the FCC’s recent Price Flex decision, we should set up a meeting to find a way to work through a number of relevant issues…Below please find a number of items we’d like to cover at this meeting.”

      Of course, it will take VZ and T 8 weeks to even respond in writing. The catalyst for their response will be, undoubtedly, your letter to the FCC delineating proposed rules and sighting their lack of responsiveness to the commercial letter you sent. :-)

      Kidding aside, please keep us abreast how this plays out.

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