CenturyLink Calls Verizon Special-Access Proposal 'Extreme and Arbitrary'

The Verizon/Incompas proposal for business data services (BDS), or “special access” market reform, would result in “extreme and arbitrary” rate reductions that would “distort and deter competition” in the market.

That’s according to a recent letter filed by CenturyLink to the Federal Communications Commission. The Verizon/Incompas proposal recommended that the Commission implement a one-time adjustment to price-cap levels over no more than a two-year period.

CenturyLink said the proposal would “slash” the standard Ethernet rates in its eight interstate service guides by between 37 percent and 89 percent, with a company-wide weighted average reduction of these standard rates of 49 percent.{ad}

“The economic incentives to pursue new infrastructure deployment are already challenging given the competitive nature of the Ethernet marketplace, which creates uncertain return on that investment,” CenturyLink said. “Slashing rates in the manner envisioned by the proposal would make that business case all the more difficult, contravening the Commission’s broadband objectives and … undermining important universal service goals as well.”

In a separate letter to the FCC, CenturyLink has laid out its own proposal it said would “preserve cable, CLEC, and ILEC network providers’ ability and incentive to pursue the infrastructure investment needed for the deployment and growth of enterprise broadband and 5G wireless offerings.”

Under CenturyLink’s proposal:

“CenturyLink has devoted significant effort to developing a framework that, in contrast to others, is administratively simple and pro-competitive,” the telco said. “While CenturyLink continues to believe that a less intrusive regime would be more consistent with the record evidence and would better promote the commission’s broadband deployment goals, it also believes that its proposal, if adopted in whole, offers a reasonable alternative to the more aggressive approaches that some parties have advocated.”

Meantime, FCC Chairman Tom Wheeler on Friday released his own proposal for BDS market reform, saying it …

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… “provides a new framework for this market that strikes a balance between targeted regulation for legacy TDM (DS1 and DS3) services, where evidence of market power is strongest, and lighter-touch regulation of packet-based services, where there has been new entry and competition may be emerging.”

Will Johnson, Verizon’s senior vice president of federal regulatory affairs, said the telco is pleased the FCC is moving forward with an order that includes aspects of Verizon and Incompas’ joint proposal, including creating a “consistent framework that applies to all competing providers and services.”

“We believe the Verizon/Incompas compromise was a reasonable approach that accommodated a number of concerns across the industry,” he said. “We will continue to work with the FCC and the industry on ways to reach a balanced solution.”{ad}

Sprint also issued a statement supporting Wheeler’s proposal:

“For well over a decade, the high-capacity broadband marketplace has suffered from a lack of competition, costing the American economy billions and slowing investments in next-generation broadband technologies. Today Chairman Wheeler took an important step to reform this broken market. We look forward to learning more about the item and continuing our work with the FCC to promote competition and ensure just and reasonable prices for all parts of the BDS marketplace.”

However, Communications Workers of America President Chris Shelton said the proposal will lead to reduced investment in broadband networks and “downward pressure on jobs and living standards.”

“The drastic rate cuts – as much as 20 percent over three years — will create pressure on companies to cut existing jobs and reduce capital outlays in fiber networks, subverting the very goals the FCC aims to achieve in this proceeding,” he said. “Because the proposal will lead to less investment in broadband networks, overall job growth in this critical industry will be stagnant.”

FCC spokesperson Kim Hart said the proposal has been circulated to the Commissioners and can be voted on at any time. Wheeler retains the option of putting it on a meeting agenda as well. The FCC’s next meeting is Oct. 27.