Verizon says Windstream, Incompas want to shift special construction costs to incumbent carriers

Verizon (NYSE: VZ) is speaking out against claims made by Windstream and competitive industry forum Incompas that the special construction practices and charges to deliver DS1 services to its retail and wholesale customers aren't consistent across its customer segments.

Special construction refers to when an ILEC (incumbent local exchange carrier) has to build out fiber or install neccessary equipment to support the delivery of Ethernet or an optical wavelength service at a customer building, for example.

In particular, Verizon takes issue with Windstream's recent claims that ILEC charges create a number of problems for both wholesale competitive carriers and businesses that want to migrate to IP-based services.

It said that Windstream's proposal over special construction costs, which follow an earlier proposal made by Incompas, cites a number of issues that Verizon or any ILEC could not require a customer to pay.

Incompas said in its May 27, 2015, ex parte filing that the FCC found that charges for facilities construction can create a source of discrimination and a way to attempt to get out of providing the "basic common carrier responsibility" for "planning and investing in facilities" when responding to requests for wholesale services.

What this means is that an ILEC like AT&T or Verizon can't charge a CLEC for a second fiber strand if the provider has already built out fiber into a new business customer's building. Such a situation could include areas where an ILEC has fiber installed in a building, but that fiber's optical line terminal (OLT) isn't connected to the port to support a customer's Ethernet request, for example.

"Disguised as a clarification of Incompas's proposal, Windstream's latest proposal materially changes the Incompas proposal," Verizon said in an FCC filing. "Windstream adds to the Incompas proposal many scenarios under which an ILEC could never charge special construction, regardless of facilities availability or a willingness to certify to no future re-use for retail."

One of the particular issues raised by Windstream in its proposal is special construction on IP Ethernet services.

Verizon said that construction costs for Ethernet emerge in buildings that don't have existing fiber or other related equipment.

"Construction cases for Ethernet arise when a building is not served with the fiber or other equipment needed to provision service," Verizon said. "Verizon already absorbs much of the costs of constructing Ethernet facilities to respond to customer requests and often absorbs all of those costs."

Verizon said that what's concerning about Windstream's proposal is that it only focuses on the ILECs.

It pointed out that Windstream and other competitive carriers are solely focused on the ILECs despite seeing growing Ethernet competition from cable operators and they are not asking those providers to absorb similar costs.

"Windstream and others want to shift as much of any remaining construction costs as possible to the ILECs," Verizon said. "At the same time, Windstream and others are not asking ILEC competitors, such as cable companies, to operate that way. Cable companies are aggressively introducing Ethernet services as alternatives to ILEC services, and Time Warner Cable, Comcast, and Cox now are the fifth, sixth, and eighth largest providers of Ethernet services in the United States, respectively."

That does not mean Verizon has not been heeding its customers concerns. Following feedback from a number of its customers, telco said in it has made a number of changes to its about special construction process.

"Verizon over many months has discussed with its customers some of the concerns they raised to the Commission about special construction," Verizon said.  "As a result, we revised our special construction procedures so we can better serve both our retail and wholesale customers. And, despite recent allegations to the contrary, Verizon applies the same special-construction policies to retail and wholesale customers."

For more:
- see this FCC filing (PDF)

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