Critics Call On FCC to Curb AT&T, Verizon Pricing

Carriers and money

WASHINGTON — To curb the rates large telecom providers charge for access to the so-called middle mile of their data networks, a broad-based coalition of industry groups, advocacy organizations and other stakeholders launched today with plans to press the Federal Communications Commission to regulate the market.

The No Choke Points coalition is taking aim at special access fees, the loosely regulated rates AT&T, Verizon and others charge carriers for access to their wireless and fiber-based broadband infrastructure.

“We believe the choke hold at AT&T, Verizon and other large telephone companies have on the special access market is threatening the broadband economy,” Bob Azzi, the senior vice president of Sprint Nextel’s network division, said at the coalition’s launch this morning here at the National Press Club. “The net effect is to reduce customer choice and the availability of broadband service.”

The coalition claims that the incumbent telecom providers yield a profit margin of more than 100 percent from the sale of special access services, a cost that is absorbed by smaller carriers and their customers.

Its members are asking the FCC to intervene and establish some form of pricing regulation, a policy the agency moved away from in 1999.

AT&T and Verizon, the principal targets of the campaign, vigorously dispute the charge that they are gouging smaller providers for access to their networks. Spokesmen for both providers told that the FCC continues to regulate special access pricing in noncompetitive markets, and claimed that the rates they have charged have declined in recent years.

Walter McCormick, president and CEO of U.S. Telecom, a trade group representing AT&T, Verizon and others issued a statement today chastising the groups calling for regulation for failing to provide adequate data to support their allegations of price gouging.

“These are the same old tired and discredited arguments we’ve heard for years, simply wrapped up in a new package,” McCormick said. “The facts remain unchanged. These companies have refused to provide the data to substantiate their claims.”

At this morning’s event, members of the new coalition leveled that same charge at the big telcos, accusing them of concealing details about their pricing plans.

The FCC opened a proceeding on special access pricing in 2005. The new coalition is hoping that a new administration that has elevated broadband access as a chief policy priority will act on the issue.

The group delivered a letter to acting FCC Chairman Michael Copps this morning, though its members acknowledged that the issue isn’t likely to see any movement until chairman-designate Julius Genachowski secures confirmation to take over as the head of the agency.

The Senate Commerce Committee approved Genahowski’s appointment last week. He now awaits confirmation by the full Senate.

Members of the No Choke Points coalition are trying to frame the special access pricing as a drag on the economy, pointing out that the rates AT&T, Verizon and others charge smaller service providers drive up rates for consumers and enterprises.

“These service really are the central nervous system of business,” said Colleen Boothby, an attorney with the Ad Hoc Telecommunications Users Committee, a coalition representing large businesses that are heavy IT users. “American businesses, especially in today’s tough economy cannot afford overpriced data services.”

Boothby noted that “our members typically don’t find themselves supporting regulation,” but that special access is a pocketbook issue for which they are happy to make an exception.

Some members of the No Choke Points coalition said they plan to reach out to members of Congress in an effort to press the FCC to move on the issue, but that they are not seeking legislation.

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