Frontier sides against special access, says the 'Ethernet market is competitive'

Frontier Communications is confident that when the FCC completes its analysis of the special access and local Ethernet markets, the regulator will find that the market is competitive and businesses have a bevy of service options.

Speaking to investors during the provider's first quarter earnings call, CEO Dan McCarthy said there's no need for any further regulation.

"As we look at what the FCC proposed on regulating business broadband pricing, we think the Ethernet marketplace is very competitive today," McCarthy said. "We see it each and every day and we're competing for business and the transformation is happening with fiber to the cell tower."

However, Frontier can't predict how the FCC will ultimately rule since they are still gathering information.

"The reality is that FCC will find that many of the markets are competitive and it won't have an impact at all," McCarthy said. "It's premature to predict what the final decision will look like because they are in a fact finding mode but obviously we said there's a need for regulation on the Ethernet side of the business."

On the copper-based TDM side, McCarthy said the FCC's rules only apply to parts of the territories it entered into through the acquisition of Verizon's (NYSE: VZ) and AT&T's (NYSE: T) wireline assets.

"It was really for us limited to looking at some special tariffs that were filed by Verizon and AT&T that we inherited as part of the acquisitions," McCarthy said. "From our perspective, any changes to that will be prospective and we don't anticipate any large impact to our revenue streams and we'll be working with the FCC on how to modify pricing terms for customers."

FCC Chairman Tom Wheeler's Further Notice of Proposed Rulemaking (FNPRM) proposed four key tenets for new special access regulation: identifying competitive markets, a technology-neutral approach, encouraging transitions from TDM to IP, and addressing current and future transitions.

Additionally, the FRNPM also seeks comment from all interested parties about how best to determine where competition does and does not exist. That includes competition among products, the supply and ability to supply BDS in specific geographies, and the needs of different classes of customers.

Wheeler has set a goal to have the FCC adopt a final order this year.

For more:
- see the earnings release

Special Report: Verizon, Frontier transition: Wireline earnings in Q1 2016

Related articles:
CenturyLink, FairPoint and Frontier protest special access changes, say it will impact rural market growth
Frontier stands firm on belief that regulating ILEC Ethernet access pricing could distort competition
CenturyLink, Frontier: FCC should not re-impose price regulations on special access services
Frontier says it is making 'solid progress' solving service outages in newly acquired markets
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