tw telecom (Nasdaq: TWTC), one of the largest competitive service providers, followed the route of other CLECs and asked the FCC to deny AT&T's (NYSE: T) proposal to eliminate certain long-term contracts that offer pricing discounts on TDM-based special access circuits it uses to connect business customers to its network.
As one of the largest competitive service providers, tw telecom has built out a sizeable network that includes 30,000 route miles of fiber. But that network doesn't reach all of its customers.
Like other CLECs such as Windstream (Nasdaq: WIN), tw telecom still has to lease DS1 and DS3 circuits from third party providers like AT&T to accommodate its customers' needs. In many cases, AT&T is the only ILEC they can rent these last mile facilities from. Eliminating long-term contracts will eliminate the contract associated with tw telecom as well.
Mike Rouleau, senior vice president of Business Development and Public Policy for tw telecom, said that if AT&T gets it way they will be forced to raise the prices of the services it provides.
"If these proposed tariff revisions were to take effect, we would have no choice but to seek increases to the retail prices we charge our customers in AT&T's incumbent LEC footprint," he said in a release.
According to industry estimates, AT&T and fellow ILEC Verizon (NYSE: VZ) jointly own about 80 percent of the special access market today.
AT&T argues that it is eliminating long-term contracts on TDM-based circuits because it is going to shut down its TDM network by the year 2020.
tw telecom has asked the FCC to "prohibit AT&T from implementing its proposed price increases by eliminating long-term contracts and pricing plans until the FCC has resolved its ongoing proceedings examining AT&T's market power over special access services--including Ethernet services--and the appropriate transition to IP-based networks."
Although the FCC has been investigating special access reform for over a year, the regulator has yet to issue a decision on AT&T's proposal.
- see the release
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