FCC Puts AT&T Special-Access Rate Hikes on Hold

Service providers who petitioned the FCC to block AT&T’s proposal to raise rates on special-access lines have won at least a temporary victory.

Sprint, Windstream and tw telecom were among the companies that asked the Federal Communications Commission to investigate AT&T’s attempts to increase the amount it charges for use of these high-capacity connections. A range of businesses from telcos to banks to retailers lease these connections from AT&T and Verizon.

“We find that there are substantial questions regarding the lawfulness of AT&Ts tariff revisions that require further investigation,” the FCC stated on Monday. The Commission put off AT&T’s request for five months as it looks into whether it is lawful.

The CSPs argued that eliminating discounts on special-access lines isn’t fair because AT&T and Verizon own the lion’s share of these lines. There simply isn’t enough competition in the market, they said.

“We are pleased that the Commission will take a closer look at AT&Ts claims,” said Angie Kronenberg, chief advocate and general counsel for COMPTEL, which represents communications service providers and their supplier partners. “In addition, we are confident that the Commissions data collection will show that there is a lack of competitive alternatives for special-access services, and that allowing AT&T to continue to unduly wield its expansive market power is contrary to a vibrant, competitive marketplace.”

This issue needs a full scrutiny of the facts so that the FCC can render an informed judgment about special access in the U.S.,” said Michael Rouleau, senior VP of business development and public policy for tw telecom, reacting positively to the Commission’s decision.

A compromise seems likely.

“We continue to doubt the FCC ultimately will simply block the AT&T transition away from TDM services,” noted Christopher King and David Kaut, analysts with Stifel Nicolaus, the investment banking firm. “Our sense is AT&T and critics will enter into some form of negotiation over what would constitute a reasonable TDM phase-out and rates along the way, with the FCC serving as a regulatory backstop to resolve continuing disputes, if necessary.”

AT&T has said the special-access proposal is part of its plan to move to an all-IP network by 2020.