UPDATE: Sprint, T-Mobile To Campaign For Network Price Caps
June 22 2009 - 2:40PM
Dow Jones News
Sprint Nextel Corp. (S), T-Mobile USA, U.S. Cellular Corp. (USM)
and several smaller phone companies are joining ranks with consumer
advocates to ask the Federal Communications Commission to cap the
price for network connections they need to transfer their
customers' voice and data exchanges.
T-Mobile is a unit of Deutsche Telekom AG (DT).
The coalition, launched Monday, argues that the current "special
access" pricing regime is getting in the way of President Barack
Obama's goal of blanketing the country with high-speed Internet
access.
Sprint says one-third of its operating costs for each cell tower
are devoted to those access charges.
AT&T Inc. (T) filed comments to the FCC Monday, saying
Sprint is blaming its "precipitously declining capital
expenditures" on rising special access rates.
AT&T said Sprint's efforts "are a cynical attempt to obtain
government-mandated reductions...in order to alleviate some of the
short-term financial and business pressures" resulting from its
merger with Nextel Corp.
"What's important to know about special access is that it's
stopping broadband," said Maura Corbett, a partner at Qorvis
Communications LLC, the public relations firm the group has hired
to ratchet up rhetoric on the issue.
High network-access charges represent the biggest barrier to
Internet deployment, the "No Choke Points" coalition says.
It's a tough sell. FCC Acting Chairman Michael Copps earlier
this year had planned to put out a request for more data on the
access charges, but that proposal has been put on ice.
Public Knowledge President Gigi Sohn said it would be a setback
for the coalition if the FCC punted the question by asking for more
information. The commission has all the data it needs to impose the
price caps now, Sohn said.
The coalition says Verizon Communications Inc. (VZ) and AT&T
control 80% to 90% of the market connecting to the "backhaul"
network, which connects to the main Internet artery.
Companies that sell the network capacity are fighting back.
Verizon, AT&T, Qwest Communications Inc. (Q), Embarq Corp. (EQ)
and Windstream Inc. (WIN) say capping their network prices would
deter Internet deployment, because then companies wouldn't build
their own connections.
"They want policies that minimize their own investment in U.S.
broadband," said a fact sheet from USTelecom, an association
representing large phone companies.
USTelecom also says price caps already exist in two-thirds of
the country's census regions. The FCC has lifted caps only in areas
where it has seen sufficient competition. More regulation would be
overkill, the association said.
Sprint and others seeking lower access prices say that's
nonsense. Parsing the data in terms of people, instead of
geographic regions, shows that 87% of the American population is in
unregulated territory, said Colleen Boothby, who runs a group of
"large business customers who are heavy users of
telecommunications."
Robert Quinn, AT&T senior vice president of federal
regulatory affairs, said the FCC needs to obtain data from
competitors to get the complete picture of the special access
market. AT&T has given this type of pricing information to the
FCC and the Justice Department as part of past mergers.
Competitor phone companies recently told the FCC they are
willing to turn over "highly sensitive" network pricing information
to allow the commission to regulate in this area. Quinn said any
data offered to the FCC on a voluntary basis won't be enough.
Boothby's Ad Hoc Committee has long been lobbying for more
regulation in this area. Her group includes companies from the
financial services, automotive, manufacturing and insurance
sectors. The committee doesn't represent phone companies.
The "No Choke Points" coalition's members include the wireless
Internet company Clearwire Corp. (CLWR) and several small
competitor phone companies like tw telecom inc. (TWTC), Cbeyond
Inc. (CBEY), Covad Communications Group Inc., One Communications,
and XO Communications, a unit of XO Holdings Inc. (XOHO).
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com