Just one week after a coalition of competitive local exchange carriers (CLECs), consumer advocates and large business broadband customers called for FCC action against “lock up” provisions in incumbent local exchange carrier (ILEC) special access contracts, the FCC responded last Friday by launching an investigation into special access tariffs filed with the agency by AT&T, Verizon, CenturyLink and Frontier Communications.
According to the FCC order announcing the probe, the purpose of the investigation is to “gather sufficient information to enable the full Commission to decide whether and how to resolve” allegations that ILEC special access contract terms “are unreasonable, anticompetitive and lock up the vast majority of the demand for TDM-based business data services.” Among the contract practices to be examined by the FCC are (1) commitments to purchase special access services that are equal to “a relatively high proportion of the customer’s historical or existing . . . level of purchases,” (2) shortfall fees, (3) upper percentage thresholds, (4) overage penalties, (5) long-term commitments, and (6) fees for early contract termination. These practices will be assessed pursuant to Sections 201(b) and 202(a) of the 1934 Communications Act, which direct the FCC to determine whether such practices are “just and reasonable” or are “unreasonably discriminatory.”
In addition to submitting “additional, more targeted data” on special access pricing, terms and conditions, AT&T, Verizon and other ILECs named in the FCC’s order must also provide “indicators” of whether contracted special access customers (1) are required to make percentage commitments or are given an option to make such commitments, and (2) are required to make all of their purchases within the plan. Affected ILECs must also submit data on the duration of each agreement, the name of the purchaser and whether the purchaser is a CLEC, an end-user or a provider of mobile wireless services. For any single special access pricing plan, affected ILECs must submit to the FCC copies of their 20 largest end-user agreements in terms of dollar value or copies of agreements “that constitute 80% of all end-user purchases under the pricing plan.”