AT&T Objects to Windstream Proposal To ‘Reimpose’ Ethernet Rate Regulation
AT&T urged the FCC to reject Windstream’s attempt to re-regulate ethernet rates of ILECs, including as part of an IP technology transition order that is expected to be placed on the preliminary agenda Thursday for the Aug. 6 commission open meeting. FCC ethernet rate regulation would be legally defective and bad policy, given how competitive the business market for ethernet services is, AT&T said in an ex parte filing posted Tuesday in the tech transition docket 13-5 and others.
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Windstream, a CLEC and ILEC, recently asked the FCC to “impose ‘interim’ pricing rules for IP special access services (i.e., Ethernet services) as legacy TDM [time division multiplexing] services are discontinued,” AT&T noted, referring to a Windstream letter. Windstream seeks a “hold harmless” approach that would ensure existing special access customers have access to per-Mbps pricing for IP inputs that wouldn’t exceed the per-Mbps rates for TDM inputs for comparable service in a market until comprehensive special access reform is completed. Windstream asked the FCC to develop “TDM benchmarks” and use them as “the per-Mbps rate for the relevant TDM special access term plan that is at least as long as the term plan for the comparable IP offering,” with the same general pricing safeguards extended to special access customers entering new markets.
AT&T urged the FCC to “reject these and all similar proposals to reimpose rate regulation selectively on ILEC provision of highly competitive Ethernet services.” AT&T said the FCC “would face two insurmountable legal bars” to such rules: “it would have to ‘reverse’ the forbearance that was properly granted nearly a decade ago for such services and satisfy the stringent standards of Section 205 [of the Communications Act] to prescribe the rates for such services. The Commission does not remotely have the record to reach either conclusion, and it would be especially inappropriate to jump the gun and impose such ratemaking measures before it has even considered the data it is collecting in the special access proceeding.”
AT&T said that ethernet services are “among the least appropriate candidates for any sort of rate regulation, interim or permanent” because the marketplace is “intensely competitive.” The number of ethernet port installations grew by 26 and 23 percent in 2013 and 2014, respectively, and no provider has a port share of more than one-fifth of the market, AT&T said.
More recently, Windstream noted its six principles for ensuring equivalent wholesale access on functionally equivalent rates, terms and conditions, according to an ex parte filing posted on Monday. It said the principles were targeted to prevent ILECs from using the IP transition as an "unjustified excuse to increase charges for baseline connections to small businesses, nonprofits, and government entities," which would depart from the current regime under which "regulated last-mile inputs anchor the rates for packet services," subject to forbearance relief. “As the Commission evaluates how best to implement these principles, it is critical that each potential avenue for increasing the baseline rates be foreclosed unless specific, good cause can be shown for a departure,” Windstream said. “In particular, an ILEC action that would have the effect of increasing total charges to the wholesale purchaser in the absence of demonstrable increases in underlying costs should not be permitted. This is necessary to preserve still-needed constraints on ILECs’ ability to raise rivals’ costs by exercising market power.”
Similarly, Granite Telecom recently said wholesale prices shouldn't rise in the transition. “Regardless of the manner in which the Commission chooses to ensure that wholesale customers and competition are not harmed by incumbent LEC discontinuance of legacy wholesale services, the primary focus should be to prevent incumbent LECs from setting the price of IP wholesale services above the prices incumbent LEC charge for equivalent legacy wholesale services,” said a Granite ex parte filing posted Friday.
FCC Chairman Tom Wheeler has circulated a draft IP tech transition order that would require telecom carriers to notify both consumers and competitors of copper retirement plans, and to offer competitors replacement wholesale services at rates, terms and conditions that are “reasonably comparable” to those of legacy services, said agency officials on Friday (see 1507100050). They noted the latter would be an interim measure while the FCC reviews its broader wholesale rules in a special-access proceeding. The reasonably comparable standard would not be as strict as the standard the FCC proposed in a November NPRM that would have required equivalent wholesale access on equivalent rates, terms and conditions.