Lumos says competitive fiber providers should not face new pricing regulations

FCC headquarters
Image: FCC

As the FCC completes its review of the special access market, Lumos said the regulator should not impose rules on competitive fiber providers that reside in markets where a large ILEC’s prices are regulated.

In an FCC filing, Lumos said that since it sells product solutions versus circuits, it would be challenging to determine “whether Lumos’s proposed price for a particular configuration exceeded the benchmark.”

Echoing a similar theme made by cable operators like Comcast, imposing rules on competitors like Lumos could also impact network investments.

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“Given differences in rates and rate structures across ILECs, it would be difficult, if not impossible for Lumos to ascertain whether a particular price would comply with the applicable benchmarks,” Lumos said in the FCC filing. “The process of comparing proposed prices for packages of services with benchmarks based on different ILEC rate structure and different network configurations would add costs and create uncertainty, thereby reducing the number of projects Lumos could build, consistent with its mechanism for determining whether a project would generate an adequate return on investment.”

Unlike the traditional telcos competing with Lumos such as Verizon, which have a well-established set of network assets and access to key rights-of-way and buildings, Lumos is faced with the challenge of negotiating agreements in each new market it enters with its fiber services.

“Incumbent LECs have massive advantages by virtue of their ubiquitous networks, reducing their cost of right-of-way, franchising, and building access, existing customer bases that were obtained as the result of their incumbency, and the ability to obtain discounts on equipment and materials that are not available to competitive fiber providers,” Lumos said. “Given these handicaps that competitive fiber providers face, the application to them of the type of regulation that has been proposed in this proceeding would impede the very competition the Commission is seeking to encourage.”

The service provider’s request comes at a pivotal time for the company.

During its second quarter earnings call, Lumos said it is moving forward with plans to separate its legacy telecom assets and become a standalone fiber-based provider to businesses and carriers.

At that time, the company said it “expects to articulate a full set of separation plan alternatives” during its third quarter earnings call.

Already, Lumos has built out the foundation from which it will operate the separate fiber-based company to serve a mix of wholesale wireless operators and business customers. The service provider has continued to expand the reach of its fiber network into Richmond and Hampton Roads/Norfolk, Virginia, a market dominated mainly by Verizon.

As of the end of the second quarter, Lumos reached a total of 1,295 unique FTTC sites, up 33 percent year-over-year. It also had a total of 1,636 FTTC connections, up 25 percent year-over-year.

In addition to FTTC, the telco built out fiber to more buildings to satisfy its enterprise customer base, adding 110 lit buildings to reach 1,922. This was a 22 percent year-over-year increase.

For more:
- see the FCC filing (PDF)

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Lumos grows Q2 FTTC, enterprise revenue 22% to $22M, continues with separation plan
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