FCC To Examine Prices Phone Cos Pay For Network Connections
October 08 2009 - 6:12PM
Dow Jones News
Federal Communications Commission Chairman Julius Genachowski
has pledged to open an inquiry into the prices telecom firms charge
others for the network capacity needed to transfer phone calls and
Internet exchanges, signaling that further regulation of that
market may be on the horizon.
In a letter sent Tuesday to Sen. Daniel Inouye, D-Hawaii,
Genachowski said the FCC will issue a public notice within the next
30 days seeking comment on the "appropriate analytical framework"
for examining the network pricing structure.
Curbing the prices for the network connections is a top priority
of Sprint Nextel Corp. (S), T-Mobile USA, U.S. Cellular Corp. (USM)
and several smaller phone companies that claim they are being
gouged by high connection prices from giants like Verizon
Communications Inc. (VZ) and AT&T Inc. (T).
Sprint says one-third of its operating costs for each cell tower
are devoted to those access charges. T-Mobile is a unit of Deutsche
Telekom AG (DT).
A coalition of those companies and some public interest groups
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.
Verizon and AT&T, along with Qwest Communications Inc. (Q),
Embarq Corp. (EQ) and Windstream Corp. (WIN) - which all sell the
network capacity - say curbing their network prices will deter
companies that rely on their networks from building their own
connections.
The FCC began looking into special access in 2005 and asked for
more data two years ago, but questions still remain about whether
the market is competitive. Parties on both sides of the issue claim
the pricing data backs their point of view.
Genachowski said the FCC inquiry would establish as a "threshold
matter" the framework that will determine the types of data it
needs to collect. Companies may be reluctant to give up that
information, citing its market sensitivity.
"These issues have been pending for many years, and I appreciate
the understandable frustration of many parties regarding the
Commission's lack of progress in addressing special access issues,"
Genachowski's letter said.
In a related development, the FCC on Thursday sought public
comment on whether the costs of connecting rural residents and
businesses to the main Internet arteries is an impediment to
broadband deployment.
"Several entities have claimed that adequate, reasonably priced,
and efficiently provided access to middle and second mile transport
services and facilities play an important - if not gating - role in
the economics of broadband deployment," the FCC inquiry said.
- By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com