Frontier stands firm on belief that regulating ILEC Ethernet access pricing could distort competition

Frontier Communications is reiterating its stance that if the FCC places new regulations on how ILECs price their Ethernet offerings it could inhibit competition and stall new investments in last mile infrastructure.

During a recent meeting with the FCC, Frontier said the FCC's previous decision to exempt ILECs from regulating Ethernet pricing helped foster the buildout of Ethernet throughout the United States, but also lowered service rates.

"The Commission has exempted virtually all of the price-cap ILECs from tariffing and dominant carrier regulation with respect to their Ethernet offerings, resulting in a massive expansion of fiber and other Ethernet-capable facilities," Frontier said in a FCC filing. "These facilities have been deployed not only by ILECs but also by CLECs and cable providers, ushering in vigorous competition and dramatic price cuts. As Frontier and others have emphasized, U.S. retail carrier Ethernet pricing fell by double-digit rates for all services across all speeds between 2010 and 2015."

Besides offering business access services, Ethernet and fiber-based facilities are also key to wireless operators as a source of wireless backhaul. Wireless operators today are using a mix of lit fiber-based Ethernet and even dark fiber services at their macro towers and even their small cell sites to support 4G services while setting a foundation for 5G.

Frontier said that the "demand for Ethernet is likely to grow further, leading to expanded revenue opportunities and an ever-improving business case for competitive deployment, as 4G wireless services give way to higher-bandwidth 5G services requiring more and more robust backhaul networks."

The service provider added that these "facts counsel strongly against the imposition of new pricing regulation in the above-referenced proceedings" and that this brand of "regulation could distort competition and impede the achievement of core Commission goals."

Frontier's appeal to the FCC comes at a key time for special access.

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.

Verizon and Incompas' proposal also gained the support Sprint and T-Mobile, which said in a joint filing that the FCC should adopt policies "consistent with the Verizon and Incompas agreement." 

However, AT&T (NYSE: T), CenturyLink (NYSE: CTL) and cable industry associations NCTA and ACA have been critical of the FCC and the joint proposal, saying it would just hold up new investments from happening.

For more:
- see the FCC filing (PDF)

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