As the FCC moves forward with its special access review process, the Consumer Federation of America (CFA) revealed in a new study that the incumbent telcos' hold on the market has cost consumers over $150 billion since 2010.
Due to what it says are abusive pricing practices for "special access" services from ILECs like AT&T (NYSE: T) and Verizon (NYSE: VZ), CFA estimates that overchargers totaled about $75 billion over the past five years.
In its report "The Special Problem of Special Access: Consumer Overcharges and Telephone Company Excess Profits" the CFA looks at the role special access plays in the U.S. telecommunications and broadband marketplace and the impact concentrated market power has on American consumers and the American economy.
"The anticompetitive, anti-consumer conduct of the large incumbent telephone providers is a shocking reminder of the immense market power held by these organizations and the consequences this kind of concentration can have on both the individual consumer and the American economy," said Mark Cooper, Director of Research at the Consumer Federation of America and author of the study.
CLECs and wireless operators purchase special access services to backhaul mobile broadband services and deliver competitively priced services to anchor institutions like hospitals, schools and libraries, public safety offices, ATM networks.
CFA says its analysis shows that the concentration of the special access market by large incumbent carriers is at least three times the threshold of highly concentrated as measured by the Hirschmann-Herfindahl Index, or HHI.
For their part, large telcos such as AT&T, Verizon and CenturyLink have maintained that CLECs and businesses have a number of new alternative services from cable operators.
However, the reality with cable is that unlike the ILEC network, the cable network lacks the ubiquity of the traditional telcos for service.
- see the release
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