Qwest: AT&T Special Access Plan Illegal, ‘Bizarre’
The FCC would risk breaking the law if it tried to enforce a special access condition offered by AT&T and BellSouth to gain approval for its merger, Qwest warned the agency in a letter sent Thurs. AT&T agreed to lower some special access rates after the merger but said other Bells couldn’t take advantage of the lower prices unless they lowered their own prices. This is discriminatory, Qwest said: “In the event AT&T/BellSouth files such tariffs, the Communications Act and Commission precedent require the Commission to reject these unlawful provisions.”
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Verizon has raised similar concerns, saying it doesn’t plan to lower its special access charges because they already are competitive and the merger condition doesn’t appear to be “legally sustainable.” FCC Chmn. Martin and Comr. Tate said they would vote against any tariff AT&T files to put the condition into affect. Unlike other merger conditions, this one requires a tariff filing “and we would object” to it, Martin and Tate said in a statement shortly after the merger was approved Dec. 29.
At issue is the 6th of 11 special access changes AT&T and BellSouth offered, reportedly to gain more support from Democratic Comrs. Adelstein and Copps. The companies pledged to lower prices for services such as DS1, DS3 and Ethernet, but not for any price cap-regulated LEC that doesn’t make a similar discount. Qwest said the condition basically would align the prices of AT&T special access services that are subject to “Phase II pricing flexibility” with the carrier’s “Phase I” rates and, in one case, reduce prices by 15%.
Qwest said one of its subsidiaries is a “major purchaser” of such special access services from AT&T and BellSouth and would “take advantage of any non-discriminatory price reductions” were it not for the reciprocity restriction. “The Commission should take immediate action to squelch the notion that AT&T/BellSouth can lawfully file a tariff that discriminates against Qwest and other ILECs on the basis of how they choose to price their own services,” Qwest said. “Should AT&T/BellSouth actually seek to implement its unlawful plan… immediate and decisive action by the Commission will be necessary.”
An AT&T spokesman wouldn’t comment on the legal issues surrounding condition 6, saying only that “in order to conclude the merger” it made a variety of commitments based on negotiations with the Commission.
It wasn’t clear if any companies other than Qwest and Verizon were affected by the commitment. The companies would have to be price cap LECs, purchase service from AT&T or BellSouth and have Phase II pricing flexibility in their own territories to be affected, a source said.