Best Efforts Services Remain Sticking Point as Special Access Vote Pushed Back Again
Whether to include data on “best efforts” Internet services in a special access market analysis remains the focus of negotiations between Republican FCC commissioners and their Democratic counterparts. The latest special access draft was distributed to commissioners Friday afternoon, but given the complexity of the subject matter and the number of changes that have been made, it wasn’t feasible to vote on it Friday, FCC officials said. “There’s been movement” from the Democrats’ and Republicans’ original positions, as both sides try to find common ground, one official said.
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The question is whether such services should be counted in the market analysis as substitutes for special access, FCC and industry officials said. “Best efforts” is a longstanding term of art within the Internet industry, and in the latest ex parte discussions it’s come to mean Internet services that are not dedicated special access circuits. Providers and purchasers of special access services are divided on whether to include best efforts data, with Republican commissioners pushing for their inclusion (CD Nov 30 p6).
USTelecom argued that although there are “certainly differences” between dedicated and non-dedicated broadband services, cable business broadband services are “explicitly marketed as superior alternatives to ILEC special access services” and should be included in any special access market analysis (http://xrl.us/bn39pz). Cable companies like Comcast heavily market non-dedicated broadband services to small and mid-size businesses, USTelecom said. The association attached ads from Comcast, Cox Communications, Charter Communications and Time Warner Cable targeting businesses and arguing cable services are cheaper, easier to install and just as secure and reliable as T1 lines. Although “not identical” to special access, some customers accept them as competitive alternatives, USTelecom said. “This is precisely why CLECs such as Cbeyond, EarthLink and Integra have urged the Commission not to collect such data from cable companies.” Excluding the data would “pre-judge the ultimate question of this entire inquiry -- the scope and competitiveness of the business services marketplace,” USTelecom said.
"Their argument is so silly I've been trying to ignore it,” said Colleen Boothby of Levine Blaszak, who represents high-volume corporate customers of special access services. “Special access” is not Internet access, she told us: It’s “transmission capacity, between any two points selected by the customer.” The “whole point” of special access is that it’s a channel dedicated to the exclusive use of a customer so they can count on capacity being there when they need it, she said. “You want your bank ATM to be on a ‘best efforts’ network, so you can maybe, sorta, kinda sometimes get money out of it?"
Economists we spoke to were divided on whether best efforts services were substitutes that should be considered in a market inquiry. “To argue that the service that cable television offers to businesses is not a competitor to special access is insanity,” said George Ford, chief economist at the Phoenix Center, a frequent foe of telecom regulation. Cable Internet services are not as reliable as special access “on paper,” and it might not be a substitute for everyone, but “there’s no question that there’s a whole ton of customers out there that would view a cable broadband service as equivalent, better, or good enough substitute for special access services,” he said. “If the FCC says ‘I'm not going to look at the data,’ then they've failed at their job."
But the cable industry worries about the “extreme burden that a nationwide, building-by-building data request would impost on cable operators, which offer competitive broadband services that are not subject to Commission regulation,” NCTA told an aide to Commissioner Ajit Pai on Thursday (http://xrl.us/bn39sb). The burden of providing pricing information for non-dedicated best efforts service would be excessive given the “minimal benefit to the Commission that this data would provide,” NCTA said.
Collecting data on Internet access “confuses the critical differences between the special access and Internet access markets, and will not only distract the FCC, but slow the FCC’s ability to analyze the broader special access market,” said economist Joseph Gillan of Gillan Associates, who’s worked for CLECs and other competitive providers. Best efforts offerings “are not generally within the same product market as the services that are unambiguously defined by the deterministic routing and defined quality standards special access,” he said. “Any honest observer would note from the ads attached to [USTelecom’s] ex parte that the T1s are clearly not part of the same retail market, given the dramatically different price points.”