AT&T claims Level 3, other CLECs want to re-regulate special access market

AT&T (NYSE: T) fired another salvo in the special access debate, accusing Level 3 and CLECs (competitive local exchange carriers) of wanting the FCC to re-regulate the special access market.

The ILEC said that traditional copper-based access lines, particularly voice lines at AT&T and other telcos continue to decline, and CLECs are wasting resources by asking for more rules. Its own copper-based lines have declined by almost 65 percent, or by over 30 million lines, since 2009 as more consumers ditch their legacy service for VoIP and mobile services.  

"Yet, despite all the evidence pointing to the end of the copper era, the competitive local exchange carriers (CLECs) seem hell bent on championing the imposition of greater regulation on quickly disappearing copper-based TDM special access services," said Caroline Van Wie, assistant VP of federal regulatory for AT&T, in a blog post. "On its face, this appears to be a peculiar use of energy, resources, and political capital."  

The service provider maintains that the FCC should also not be allowed to overturn its regulatory forbearance on fiber-based Ethernet services.

AT&T says that competition from CLECs and cable operators has continued to rise in recent years as service providers like Comcast have invested billions of dollars to deliver services to business customers.

"ILECs, CLECs, cable companies and others have invested billions to build-out fiber infrastructure in the race to provide high-speed business services," Van Wie said. "Data collected in the special access proceeding show that these networks are so extensive that they reach virtually every census block that today has any demand for special access services.  And a recent industry analysis shows that today there are nine major U.S. Ethernet competitors with port shares of at least four percent, the majority of which are not ILECs, but are instead CLECs and cable companies.  In fact, Level 3, a CLEC, is the second largest Ethernet provider in the country."

The service provider also calls out how wireless operators will have even more options for competitive backhaul to meet their current 4G and 5G needs.

Sprint awarded contracts to a number of CLECs and cable operators to build out Ethernet backhaul for 38,000 macrocell sites in 2010, for example.

"The same competitors that successfully competed to build Sprint's backhaul network will be similarly well-positioned to provide 5G Ethernet backhaul, especially given the location of their fiber facilities," Van Wie said. "CLECs and cable companies have a huge amount of fiber already deployed in dense urban business districts -- precisely the areas where 5G densification will be necessary."

Meanwhile, Verizon has beefed up its fiber holdings for backhaul and business services by announcing its purchase of XO Communications, giving it deeper metro fiber and more on-net buildings.  

Although a number of large competitive carriers, including Level 3 have built out their own fiber networks, there are still a number of locations they can't reach so they will rent last mile facilities from larger incumbent telcos such as AT&T and Verizon (NYSE: VZ).

A large number of these facilities are copper-based and are used to provide services in buildings where it can't currently make a business case to build out its own facilities.

Regardless of the growth that Level 3 and others have seen, the reality is these carriers lack the ubiquity of the ILEC network.

For more:
- see this blog post

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