AT&T, CenturyLink claim Granite's request to combine Section 271, wholesale services will delay IP transition

AT&T (NYSE: T) and CenturyLink (NYSE: CTL) said in separate filings with the FCC that Granite Telecommunications' request to combine unbundled local circuit switching and shared transport services is not only procedurally flawed, but could also inhibit their ongoing transitions to an all IP network.

At issue is Granite's argument that traditional ILECs should offer equivalently priced wholesale access services that they offer today over their existing TDM-based networks such as T-1 and DS-3 services.

Traditional telcos are mandated to offer unbundled network elements and other wholesale services under Section 271 of the 1996 Telecom Act.

The CLEC's concern is that if operators like AT&T and Verizon discontinue these services and don't provide similar service at equivalent rates, it could pose potential harm to both the CLEC and their customers who can now choose from a number of lower priced service options besides the ILEC.

"If the ILECs are permitted to stop offering their current wholesale services without offering CLECs equivalent wholesale access on equivalent rates, terms, and conditions when they retire their older technology, the CLECs will be forced to pay more to the ILECs, obtain less desirable and likely higher cost inputs, or exit the market," wrote Granite in its filing. "In any of these cases, the CLECs' customers will be harmed. The CLECs' customers will either have to pay higher prices to cover the CLECs' higher costs, purchase less preferred services from the ILECs, or stop using the services altogether."

Granite added that ILECs' customers will also suffer due to the higher prices because they would not be able to purchase services from other providers.  

"The ILECs' customers will also be harmed," wrote Granite. "The ILECs' customers will no longer gain the benefits of this current CLEC competition. The ILECs' customers will no longer be able to threaten to switch to these CLEC services (at least not as effectively), and so the ILECs will have the power to charge higher prices for their retail services."  

Comptel, an industry advocacy group that represents CLECs, said in its own filing that the FCC should rule that ILECs should be required commingle or allow competitive providers to commingle a Section 271 network element or other network elements they buy from an ILEC.

"Granite explains, although courts have held that BOCs are required to commingle Section 251 UNEs with Section 271 network elements, the Commission has not adopted rules requiring that BOCs commingle Section 271 network elements with other wholesale services," wrote Comptel in its filing. "The Commission should eliminate this uncertainty by clarifying that BOCs are required to commingle, or permit competitive carriers to commingle, a Section 271 network element or combination of Section 271 network elements with wholesale services obtained from an incumbent LEC absent a reasonable basis for refusing to do so."

However, AT&T and CenturyLink both refuted Granite's claims in separate filings.

AT&T cited how Granite earlier this year signed a new wholesale arrangement with the telco that will last through 2017.

"Granite asserts that it will be unable "to obtain viable wholesale agreements with the BOCs" absent Commission action. But Granite provides no support for that claim. On the contrary, Granite acknowledges that it already has commercial agreements with BOCs," wrote AT&T. "In fact, AT&T and Granite just last year reached an agreement to extend their commercial agreement through 2017."

AT&T added that none of the traditional RBOCs are under any obligation to combine or "comingle" elements of unbundled local circuit switching and shared transport services.

CenturyLink in its own filing agreed with AT&T's assertions, adding that Granite's requests could hold up the ILEC's ongoing movement to IP. The telco is moving to conduct an all IP trial with business customers in its Las Vegas market.

"Granite's proposed combination and commingling regulations would hinder the BOCs' ability to manage their networks and participate in the ongoing migration to IP-based facilities and services," wrote CenturyLink in its filing. "With the shift away from copper-based services, CenturyLink's central offices and copper plant are increasingly underutilized. Given this falling demand, CenturyLink is exploring various ways of optimizing these assets to reduce maintenance costs and devote more resources to extending fiber deeper in its local networks."

CenturyLink said that besides the UNE-P replacement products, Granite can purchase from CenturyLink, AT&T and and other ILECs, Granite can obtain Ethernet local access to commercial locations from numerous alternative providers, including cable operators.

For more:
- see Granite's filing (.pdf)
- here's AT&T's filing (.pdf)
- and CenturyLink's filing (.pdf)

Related articles:
Granite targets shopping malls, retail vertical with fiber-based services
Granite, AT&T extend wholesale agreement through 2017
AT&T's IP transition trial should consider impact on business customers
Granite Telecom ready to take part in AT&T's IP transition trials
Granite Telecom hits $1B annualized revenue mark

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