Sprint Backhaul Business Proves Competition Exists in Special Access Market, Verizon Says
Sprint Nextel’s conduct in awarding contracts for its wireless backhaul business “conclusively disproves” its claims that there are no alternatives to traditional ILEC special access services, Verizon (NYSE: VZ) argued in a letter to the FCC Wednesday. The data, which Verizon determined by using the latitude and longitude of each cell site, should guide the commission as it prepares its upcoming mandatory data request on the special access market, Verizon said. Special access purchasers criticized Verizon’s data as “backwards looking,” and questioned whether Verizon took into account “competitors” who are merely reselling Verizon circuits.
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Verizon said when Sprint accepted competitive bids to move its wireless backhaul away from TDM-based services toward next-generation higher-capacity services, it only gave Verizon a contract at 6 percent of the sites in Verizon’s incumbent footprint. Verizon said it determined this figure by using the coordinates of each cell site. “While Verizon has no direct information about what Sprint did with the contracts and sites that Verizon did not win, public reports indicate that Sprint has almost completed the backhaul contracts” for its 38,000 sites, and Verizon is “not a significant vendor,” Verizon said, quoting a Nomura Equity research report.
Verizon gave the commission maps depicting the location of the cell sites where it had won contracts. Redacted for public inspection, Verizon says the maps show that “both in the urban centers of cities and in the suburban and rural outskirts, Sprint did not award to Verizon its backhaul business at an overwhelming number of the cell sites open for bid."
"These data show without question that competitive alternatives are available for high-capacity services,” Verizon said, arguing Sprint is but one of several companies making use of the alternatives. “Cox Communications, tw telecom, XO, Tower Cloud, FiberLight, CableVision, Level 3 and others have recently touted the growth of their high-capacity services and the move away from TDM-based services. This is precisely the kind of information that Sprint and others have failed to provide to the Commission and that they are trying to prevent the Commission from collecting -- and it proves conclusively that Sprint’s arguments are false and lack credibility,” Verizon wrote. Sprint did not comment by our deadline.
"Verizon points to backwards looking data to say that the Commission, in reforming special access, should not look at backwards looking data,” said Mike Mooney, Level 3’s general counsel-regulatory policy. The commission has already said it will look at where competition currently exists and where it could exist, he said. But while examining that, “the Commission can’t forget that the incumbents’ anticompetitive ‘lock-up’ practices hinder potential competition significantly since large customers in ‘potentially competitive’ places can’t buy more than a fraction of their demand from anyone other than Verizon and the other incumbents."
"I've seen so many of these breathless ILEC claims about huge changes in the marketplace that it’s hard for me to get excited about them,” said Colleen Boothby of Levine Blaszak, who represents high-volume corporate customers of special access services. “The ILECs never say whether all those competitors they love to point to have their own transmission facilities or have to buy VZ special access,” she told us via email. “VZ’s letter doesn’t tell you whether those competitors supposedly serving Sprint are re-selling VZ special access circuits or building their own. That’s what the FCC’s data collection will smoke out.”