CenturyLink, Verizon say FCC should not re-regulate the special access market

CenturyLink (NYSE: CTL) and Verizon (NYSE: VZ) have fired the latest salvos in the special access saga, claiming that the FCC should refrain from re-regulating the special access market due to the growth of competitive service options from cable providers and CLECs.

Over the past two years, CenturyLink points out how a number of its CLEC competiors as XO, Windstream, and Level 3 along with cable have accelerated their deployment of fiber and Ethernet services.

With the competition from cable operators and competitive providers as a backdrop, CenturyLink said in a FCC filing that the regulator should not rescind relief in Metropolitan Statistical Areas (MSAs).

"Although the FNPRM suggests a general deregulatory intent, it alludes to the prospect of ILECs being required to "revert" to price cap regulation in areas that are deemed to lack competition (or at least, a particular level of competition)," CenturyLink said. "Such an outcome would be troubling on several levels, and CenturyLink urges the Commission to refrain from undoing arrangements on which the industry has long relied, particularly given the extremely high levels of competitive deployment in MSAs with pricing flexibility."

CenturyLink added that the FCC's "precedent makes plain that a market is defined to include all services that customers can and would treat as effective replacements should the price of one rise significantly."

Joining CenturyLink is Verizon, which said in a separate filing that FCC's special access data collection process does not address new competitive market dynamics that weren't in place during the 2013 period when it collected that data.

The service provider said one of the key problems is that the FCC only collected one year's worth of data, which will inhibit its ability to thoroughly understand emerging market dynamics like cable's growing presence in the business services market.

Comcast, for instance, launched a new unit dedicated to the needs of larger company satellite offices. Meanwhile, Charter's pending acquisitions of Time Warner Cable and Bright House will give the cable MSO a broader footprint to serve business customers.

"Instead of collecting two years' worth of data -- which the Commission said it needed for a comprehensive, forward-looking analysis -- the Commission collected only one year's worth," Verizon said in a FCC filing. "The data now are more than two years old, and they do not capture recent developments like Comcast's aggressive play to win enterprise broadband customers. Because they are from 2013, the data do not permit the Commission to analyze the 'state of competition today,' which was the goal of the original December 2012 Notice."

Verizon said that imposing new regulations on ILECs in the special access market would have the adverse affect of inhibiting broadband completion while giving cable operators an advantage in the market.

"There is no market failure in the high-capacity marketplace that would justify increasing the regulatory burden on Verizon and other price-cap carriers," Verizon said. "And heavier regulations on ILEC high-capacity services would not promote broadband competition. To the contrary, backwards looking regulations on one group of competitors would undermine competition by giving another group of competitors -- the cable companies, who are large, well-funded, and increasingly dominant in providing higher speed broadband services -- an unjustified advantage."

For more:
- see this FCC filing (PDF)

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