Wheeler's Draft NPRM Sets Up 'Last Mile' Debate Between Incumbents, Competitive Carriers
The draft rulemaking notice FCC Chairman Tom Wheeler said Friday he’s circulating (see 1410310047) raises an issue competitive carriers have been pushing, that a key part of ensuring competition during the IP transition is to allow them to continue having last-mile access to customers when incumbents retire TDM services. But the NPRM, and its tentative conclusion that incumbents should be required to offer an equivalent service, set up a debate, with Verizon and AT&T telling us the competitive market” is working as is.
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Organizations like Comptel and companies like Windstream had told us even before Wheeler’s announcement they were optimistic the agency would address the impact on competition when incumbents do away with the last mile TDM services that competitors rely on to reach customers. Fueling the optimism were remarks like one Wheeler had made at a Comptel event in Grapevine, Texas (see 1410070028), last month that the “IP transition is not an excuse to limit competition.” Wheeler in a blog post Friday said “to ensure competition” the draft NPRM “includes proposals to ensure that small- and medium-sized businesses do not have the benefits of competition yanked away from them.” The item, to be taken up at the commission's Nov. 21 meeting, would deal with concerns raised about the IP transition, asking whether the agency should require that replacements to copper meet the needs of customers before the traditional lines can be retired and if the agency should regulate backup battery power needed to power phones not using traditional power during outages.
At issue, officials from Windstream, Comptel and an attorney representing competitive carriers told us in separate interviews last week, is that the retirement of the TDM services would leave competitors only with more expensive options like Ethernet. That could ultimately force competitors out of business, reducing competition for customers like small businesses, hospitals and non-profits, said Windstream Vice President-Public Policy and Strategy Jennie Chandra. Retiring services without offering another service like Ethernet at equivalent rates, as Windstream wants, would also mean price increases for customers, Chandra said, because competitors would not drive down prices charged by incumbents.
Windstream has pointed to AT&T’s IP trial in Kings Point, Florida, saying the company charges eight times more for a basic Ethernet connection than for its current TDM service. Citing AT&T’s public pricing data, Windstream included data in an April 28 letter to the FCC that AT&T charges $1,075 for 2 Mbps in IP, compared to $126 for 1.5 Mbps for TDM DS1 service. The agency should “ensure tech transitions are not used as a guise for anticompetitive disruption,” Chandra said in an interview.
The commission “must ensure that incumbents do not exploit their transition to IP technologies as a way to diminish or eliminate the wholesale access to last-mile connections on which competitors rely to serve business customers,” Comptel CEO Chip Pickering said in a statement.
“If carriers want or need wholesale services from other providers in order to serve their customers, there are many options available to them,” Verizon said in a statement to us. “Today, in addition to the legacy TDM-based services we continue to offer wholesale customers, Verizon also negotiates commercial agreements with wholesale customers interested in new IP-based services, such as Ethernet. … In addition, these providers can always build their own facilities or buy services from other facilities-based providers. Companies often choose one or more of those options, demonstrating that the competitive market is working.”
An AT&T spokesman pointed to a 2012 company blog post saying “the industry – fueled by demand for mobile Internet data -- is rapidly moving yesteryear’s copper-based special access services to fiber-based, IP services. This transition is attracting new competitors, creating greater network capacity and broadband speeds, and promoting industry-wide investment and job-creation. Even those that have complained in the past about the need for re-regulating copper-based special access services in the name of competition have recently extolled the competitive market satisfying its fiber-based backhaul needs, citing multiple vendors for its backhaul contracts and pointing out that ‘AT&T was most competitive in many regions.’”