CenturyLink, Frontier: FCC should not re-impose price regulations on special access services

CenturyLink (NYSE: CTL) and Frontier have joined forces to petition the FCC over the ongoing special access regulation issue, arguing that the FCC should not re-impose new regulations on wholesale services ILECs provide to CLECs.

In an FCC filing, the two telcos said in 2006 the regulator exempted all of the price-cap ILECs from tariffing and dominant carrier regulation of their Ethernet services.

The two telcos said that the FCC's regulatory framework has ushered in an era of Ethernet competition from a host of ILECs, CLECs and increasingly cable operators like Comcast (NASDAQ: CMCSA), Cox and Time Warner Cable (NYSE: TWC).

"The result has been a massive expansion of fiber and other Ethernet-capable facilities, deployed not only by ILECs but also by CLECs and cable providers," CenturyLink and Frontier said in a joint FCC filing. "Unsurprisingly, this deployment has spawned vigorous competition and produced dramatic price reductions, all absent rate regulation. For example, U.S. retail carrier Ethernet pricing fell by double-digit rates for all services across all speeds between 2010 and 2015."

But higher speed Ethernet is just one area of Ethernet pricing where the two carriers noted price decreases.

Since 2011, CenturyLink and Frontier pointed out that the average monthly pricing for the 10 Mbps Ethernet, which are used as a substitute for TDM-based T-1 services, dropped over 20 percent.

The two service providers said that because of the falling prices of Ethernet services "there is simply no basis for the reimposition of price regulation, which would distort competition and starve providers of all types of the capital necessary for promoting the migration to all-IP networks."

For its own part, the FCC will address a Further Notice of Proposed Rulemaking (FNPR) developed by Chairman Tom Wheeler proposing a new regulatory framework for the provision of special access services during its monthly meeting on April 28.

Previously, Wheeler proposed a four-pronged technology-neutral regulatory framework that would address current and future technology transitions and identifying competitive markets.

Wheeler's proposal came only a day after fellow ILEC Verizon (NYSE: VZ) and Incompas developed a similar proposal to regulate special access services.

Interestingly, Verizon's peer AT&T (NYSE: T) blasted Wheeler's proposal, arguing that new rules will stifle investment.

"The Commission's proposals will instead lead to far less investment in broadband infrastructure -- especially in rural areas -- the very opposite of where we should be going as a nation," said Jim Cicconi, senior EVP for external and legislative affairs at AT&T, in blog post.

For more:
- see this FCC filing (PDF)
- and this FCC filing (PDF)

Related articles:
Sprint says ILEC control over special access cost U.S. economy $150B over five years
Verizon, Incompas call truce in special access regulation war
CenturyLink says cable's hybrid facilities meet its Ethernet customers' needs, negating special access changes
CenturyLink, Verizon say FCC should not re-regulate the special access market

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