GAO: FCC Needs Better Competition Data

The Federal Communications Commission (FCC) needs a more accurate measurement for determining telecom competition in commercial markets, according to a new report from the Government Accountability Office (GAO).

While the report seems to indicate limited competition for dedicated access service, the GAO stressed the FCC should consider the inclusion of additional data and better define what competition means to provide a clearer picture of the competitive landscape.

The GAO report comes at a time of rapid consolidation in the telecom industry, prompting concerns by consumer groups that the mergers between Verizon-MCI, SBC-AT&T and AT&T-BellSouth will not lead to reduced prices.

The Verizon-MCI and SBC-AT&T mergers are awaiting final court approval while the FCC has yet to approve the AT&T-BellSouth combination.

The GAO report examines dedicated access service to government agencies and businesses that require significant capacity for voice and data needs. Overall, the GAO said, the FCC’s available data indicates that incumbent carriers’ list prices and average revenues have decreased since 2001.

However, the GAO found that competition exists in only six percent of the buildings with demand for dedicated services. In buildings with the highest demand, competition exists in 15 percent to 25 percent of the buildings.

“The limited amount of facilities-based competition could be due to a variety of factors, including the high cost of constructing local telecommunications networks, government regulations, and limited competitive access to buildings,” the report states.

But the GAO added the data the FCC uses to assess competition in dedicated access “are limited in their ability to describe the state of competition accurately.”

U.S. House Committee on Government Reform Chairman Tom Davis (R-Va.), who ordered the GAO report, said in a statement the data “raises interesting issues that should be part of the ongoing discussion regarding the telecommunications marketplace.”

According to the GAO cover letter attached to the report, the FCC did not disagree with the facts presented in the report but complained that it implied a need for regulatory price controls.

“Counter to FCC’s interpretation, the report does not call for the re-regulation of dedicated access prices,” the letter states. “Instead, the report concludes that in order to better meet its regulatory responsibilities, FCC needs a more accurate measure of effective competition and needs to collect more meaningful data.”

The GAO also said the incumbent carriers “generally disagreed” with the data, claiming it was incomplete or unreliable.

“We recognize the limits of available data on the extent and effect of competition in the market for dedicated access services, but believe the data used provided a reasonable and sufficiently reliable picture of the extent of facilities-based competition,” the GAO report states.

In an e-mail statement to, AT&T accentuated the positive, noting the GAO report confirms the prices for commercial services have been “falling” for the past five years.

“This conclusion stands in stark contrast to the claims of those who have been urging the [FCC] to re-regulate special access, a step the GAO specifically refuses to endorse,” AT&T said in the statement.

AT&T also agreed the FCC needs to use better data and should require competitors to submit data that demonstrates the “true level of competition in the marketplace.”

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