Special-Access Cuts Could Yield Billions for Economy, Thousands of New Jobs, Says Report
Cutting special access rates in half would raise wages as much as $4.8 billion, create up to 101,000 jobs and add $11.8 billion to $12.4 billion to the U.S. gross domestic product, a study commissioned by Sprint Nextel reported Tuesday. Revenue from special access charges brought AT&T, Qwest and Verizon $18 billion in 2007, nearly double the 2000 figure, the study said. FCC Chairman Julius Genachowski’s staff is drafting a public notice seeking comprehensive data on the special access market and hopes to move to rulemaking or even orders this year, a commission official said.
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The NoChokePoints Coalition, which Sprint belongs to, said the study proves that the FCC should act on special access immediately. “The special access issue was on the agenda set by the FCC’s National Broadband Plan a year ago,” said Public Knowledge President Gigi Sohn Tuesday. Public Knowledge also is a member of the coalition. “The economic recovery from the recession is at the top of every political figure’s to-do list,” Sohn said. “The FCC should participate as well, and bringing a rational pricing structure to special access would be a great beginning."
Genachowski is reluctant to rush forward into special access controversies because “those questions … are certain to be litigated,” the FCC official said. The chairman knows that there are “different hypotheses” about crises in the special access market and wants a “robust” data set before starting any overhaul, the official said.
The study, by Economists Inc. principal Stephen Siwek, estimated the economic effects of cuts of 40, 50 and 60 percent. At 40 percent, more than 53,000 jobs would be added to the economy, with a $2.5 billion increase in wages, it said. At 50 percent reductions, more than 94,000 jobs would be created and $4.4 billion in wages, the report said. Sixty percent reductions could mean more than 164,000 jobs added and $7.6 billion in increased wages, it said.
AT&T Senior Vice President Bob Quinn dismissed the report as backward-looking. The National Broadband Plan “emphasized the need for private-sector investment in new fiber-based technologies,” he said by e-mail. “Every entity seeking regulatory intervention in the wake of that Plan should have to answer this question: how will its proposal promote more last-mile broadband infrastructure investment described in that plan. When surveyed under that critical light, this CLEC-sponsored study fails as have all of their past studies.” Reducing special access rates “will result in less broadband infrastructure investment, not more,” Quinn said. “One needs to ask those clamoring for regulatory intervention how lowering the price of a leased copper facility will result in a CLEC ever replacing that facility with its own fiber?” he said. “If they don’t have an answer explaining how that will happen, you'll know why they are on the wrong path."
The study has “resuscitated old data and used the most creative of accounting to come to conclusions belied by the facts before the Commission,” USTelecom Vice President Glenn Reynolds said. “Instead of investing, the NoChokePoints companies are once again asking for unsubstantiated, FCC-mandated discounts for access to networks being built by one of many competitors in this marketplace to support tomorrow’s broadband needs. Fortunately, the FCC seems to be taking seriously its role of gathering and evaluating actual facts, rather than manipulated rhetoric. The FCC’s goal here and elsewhere should be focused on incenting the deployment of fiber-based technologies to businesses and cell towers rather than artificially supporting certain competitors.”