The FCC is halting AT&T's (NYSE: T) request to stop offering long-term contracts and the associated discounts on TDM-based special access circuits it sells to CLECs and wireless operators, at least for five months.
AT&T, which would have implemented its new plan beginning today, justified its stance due to its goal to migrate its network to IP by the year 2020.
When AT&T made its plans known in October, a number of its wholesale customers such as Sprint (NYSE: S) and tw telecom (Nasdaq: TWTC) wrote a letter to the FCC saying that the action was an abuse of its standing in the special market segment.
Similar petitions were made by Windstream (Nasdaq: WIN), a hybrid CLEC and ILEC.
The FCC said that it was suspending the telco's plan for five months and it would look at "substantial questions regarding the lawfulness of AT&T's tariff revisions that require further investigation."
Under its proposed plan, AT&T would no longer offer new term plans longer than 36 months for tariffed TDM services, including DS1, DS3, analog private line, and DS0 services.
AT&T said in a prepared statement that it would work its wholesale customers and "remain flexible in attempting to meet their needs" as it continues to transition its network to IP.
While all of its wholesale customers have built out sizeable long-haul and metro networks, the reality is they can't reach every building. What's more, many single tenant buildings often require 2-10 Mbps lower speed services that are below the 10 Mbps starting point for IP/Ethernet.
A case in point is Windstream, which has been growing its base of medium and large business customers. Similar to other CLECs, Windstream is an advocate of IP-based technology, but in many instances has to use AT&T's last mile facilities to extend services to business customers.
"For many buildings in its legacy wireline service area, AT&T still is the only provider of a last-mile connection," said Eric Einhorn, senior vice president of government affairs & strategy for Windstream, in a prepared statement. "AT&T's proposal would result in dramatically increased costs for competitive telecom providers and, in turn, small and medium-sized businesses."
According to a number of competitive telcos, AT&T and Verizon (NYSE: VZ) collectively own an estimated 80 percent of the special access market. By eliminating long term contracts, local businesses would have to pay higher prices for service.
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