CenturyLink asks FCC to reject Birch, BT, Level 3 special access reform proposal

CenturyLink (NYSE: CTL) is the latest telco to join the chorus of protest against a proposal made by Birch, BT and Level 3 asking the FCC to reform special access pricing.

In a FCC filing, CenturyLink said that the regulator should dismiss the trio's arguments on a number of grounds. 

First, the telco argues that the proposal made by Birch, BT, and Level 3 is not consistent with the FCC's intent to employ a data-driven review of special access regulations.

"The Commission should reject the Joint CLECs' cynical arguments, which are both wrong and flatly inconsistent with the Commission's stated intention of employing a data-driven review of its special access regulations," CenturyLink said. "While the Commission is of course accorded substantial deference under Chevron and the Administrative Procedure Act, that deference is not unlimited -- particularly when the Commission ignores relevant evidence. Indeed, the Joint CLECs acknowledge that the Commission has been reversed multiple times when it has ignored record evidence or concocted arbitrary factors to reduce ILEC rates."

CenturyLink added that the proposal could also cause service providers to pause investments with an uncertain set of new regulations.  

"The path laid out by the Joint CLECs will lead to a similar outcome, as well as years of investment-choking regulatory uncertainty," CenturyLink said.

Echoing similar arguments made by AT&T (NYSE: T) and Verizon (NYSE: VZ), CenturyLink agrees that there's a growing base of competitive choices for wholesale services besides the ILECs. Service providers can now purchase higher speed Ethernet access services from a host of CLECs and, increasingly, cable operators.

Cable operators such as Comcast (NASDAQ: CMCSA), Cox, Charter (NASDAQ: CHTR), and Time Warner Cable (NYSE: TWC) continue to expand their business service lines. Comcast, for one, recently debuted its Enterprise services unit that is set to serve Fortune 1000 customers.

"While predicted for some time, cable providers' move up-market into broad wholesale and retail Ethernet offerings is a relatively recent phenomenon," CenturyLink said. "Indeed, Comcast just announced that it has created a new business unit to target large businesses that have multiple locations nationwide. To facilitate this expansion, Comcast has also signed network agreements with other cable operators to support these national customers. Time Warner Cable, Cox and Charter have also significantly expanded their enterprise data businesses in recent months."

While it is one of the largest ILECs, CenturyLink also operates as a CLEC to offer off-net services to its business customers where it has not built out its own facilities.

"As a CLEC, CenturyLink obtains Ethernet Local Access from a long list of non-ILEC providers to serve locations not on CenturyLink's network," CenturyLink said. "CenturyLink has particularly witnessed and benefited from a recent dramatic upsurge in cable-provided Ethernet access to business locations across the country. Such access offers a robust, completely independent alternative to ILEC Ethernet services and increases pressure on already falling Ethernet prices."

Despite the arguments made by CenturyLink and other ILECs, one of the key issues that remains for competitive providers -- even those that have aggressively built out their own facilities like Level 3 -- is that they can't reach everywhere.

And while there has been a rise in competitive choices from cable, the reality is these networks lack the ubiquitous reach that exists with ILEC networks, so competitors still need access to competitively priced special access services.

For more:
- see the FCC filing (PDF)

Related articles:
AT&T says TDM, IP-based special access competition from cable, CLEC is rising
Verizon joins ILEC chorus against special access, saying Ethernet services should not be regulated
Level 3, Birch and BT Americas say FCC has power to regulate ILEC special access rates
BT Americas' Burger says AT&T, Verizon have too much control over special access pricing
Wheeler: Transparency critical in IP, copper network transition