AT&T says TDM, IP-based special access competition from cable, CLEC is rising

AT&T (NYSE: T) has joined Verizon (NYSE: VZ) and other ILECs in support of the thesis that the FCC should not implement new regulations on the special access market.

In a blog post, the service provider said that there is growing competitive choice for businesses from cable operators and a host of competitors.

"The facts on the ground show that the dedicated services marketplace (both for TDM-based special access services and for IP-based dedicated services) is competitive and thriving," AT&T said in a blog post. "Competition from cable is both real and rapidly increasing. Traditional competitors are making significant investments in their networks to deploy fiber to customer premises."

The telco points out how Comcast Business (NASDAQ: CMCSA) has created a new division called Comcast Enterprise, which will compete with AT&T, Verizon and other ILECs for Fortune 1000 customers. While this is the first time Comcast is going after large national customers, the service provider and other fellow cable operators like Cox and Time Warner Cable have continued to evolve from supplying services to small to medium sized business customers. 

Cable is not the only segment that's making investments in last mile infrastructure to deliver services directly to their customers. XO is working through the process of a $500 million program to deploy fiber to more buildings throughout the United States, while Windstream committed $25 million to increase the number of its out-of-network on-net fiber buildings in five markets by the end of 2015.

Windstream's CEO recently told investors that it has set a goal to reduce spending on special access fees by $1 billion to the ILECs like AT&T and Verizon where it does not have its own last mile network facilities.

While it is true that these service providers have been making investments in their own last mile facilities, they can't reach every location, particularly for large business customers. GeoResults' Q3/2014 GeoAnalytic Report said that out of 20 million business buildings, of which 3.5 million house more than one business, CLECs' last mile facilities only reach a small portion. Level 3 currently has 30,000 lit fiber buildings, while XO has nearly 4,000, for example.

AT&T also took aim at a joint letter filed at the FCC by Birch Communications, BT Americas, and Level 3 Communications that said the FCC has "broad discretion" to regulate traditional TDM special access and IP-based services like Ethernet.

The telco said it agrees with Verizon and the USTelecom Association that there are a number of legal hurdles to reverse the forbearance on Ethernet services.

"From a procedural standpoint, subjecting IP-based services to price regulation would require reversing an eight-year old forbearance decision," AT&T said in a FCC filing. "Any such reversal could be effected, if at all, only after a notice of proposed rulemaking has proposed such reregulation, including the substance of the new regulations to be imposed. That has not occurred. The Commission has not sought comment on 'unforbearance' much less set forth for comment a new regulatory regime for packet-based Ethernet services."

For more:
- see this blog post
- see this FCC filing (PDF)

Related articles:
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Verizon joins ILEC chorus against special access, saying Ethernet services should not be regulated
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Windstream's Thomas: We see an opportunity to reduce $1B in special access spending