During a conference call with reporters, representatives of competitive local exchange carriers (CLECs) joined public interest advocates and large business customers of special access services in calling for FCC action against “lock up” provisions in incumbent local exchange carrier (ILEC) special access contracts that effectively force purchasers to contract exclusively with ILECs for special access services.
Special access has been described by the FCC as “a wholesale data service widely purchased by businesses and institutions that provides dedicated, guaranteed transmission of high volumes of critical data.” The agency has been analyzing special access services as part of an ongoing proceeding to consider potential reforms to that market sector. CLECs and other opponents of lock up policies claim that lock up provisions enable ILECs to impose stiff penalties for early contract termination or charge exorbitant rates when customers purchase other ILEC services without a special access contract. Last Thursday, officials of Level 3 Communications, Sprint, Public Knowledge and other members of the “Partners for the Cure/Competify” coalition targeted the FCC’s 1999 decision to implement pricing flexibility for special access in certain markets as a factor that encouraged ILECs to add lock-up provisions to their special access contract terms. Observing that the FCC’s decision to deregulate the special access market “was based on a prediction of competition that didn’t emerge,” Colleen Boothby, a spokeswoman for the Ad Hoc Telecommunications Users Committee complained that “the first thing ILECs do when they’re deregulated is raise their prices.” As a Level 3 spokesman lamented that lock up provisions force Level 3 to spend “an additional $17 million per year” in each ILEC territory where the company does business, Boothby cited the FCC’s own admission that “its pricing flexibility rules are fatally flawed,” in calling on the agency to “undo the damage [it] did in 1999.”
In terms of potential solutions, Sprint vice president Charles McKee said the FCC should enact a penalty-free “fresh look” opportunity for special access customers “to go back and determine whether there are alternatives you could switch to.” AT&T senior vice president Bob Quinn countered, however, that the complaints of coalition members are based on the “same 20-year-old message that they can’t possibly invest in their own infrastructure and need regulated access to their competitors’ networks in order to stay in business.” Stressing that his company is “investing in broadband infrastructure to provide innovative services,” Quinn replied: “if policymakers truly want more broadband infrastructure . . . they would be wise to maintain policies that actually incent investment.”