fightingFour of the nation’s largest telecom service providers are facing an FCC investigation into the pricing and terms that they offer to other service providers and to enterprise customers for special access circuits. On Friday the FCC noted that it had found potentially unjust special access pricing practices on the part of four carriers – AT&T, Verizon, CenturyLink and Frontier. The carriers have until December 18 to respond.

FCC Special Access Probe

Special access circuits are TDM lines connecting business locations to local telecom company central offices. While large incumbent carriers such as AT&T and Verizon argue that there is plenty of competition in that market and that the government shouldn’t regulate pricing, some other carriers and enterprise customers say that in many cases the incumbent is the only carrier offering connectivity to certain locations and therefore is in a position to exert monopoly power.

Several years ago the FCC deregulated special access in areas that the incumbents said were competitive. But more recently the commission halted that practice, arguing that it needed to study the matter more closely. The commission collected vast amounts of pricing information from the incumbents and from other service providers, as well as enterprise users – pricing information that now has been released to authorized individuals.

Competitors argued that the information illustrates problems with the incumbents’ pricing, including long-term lock-in contracts which, they said, discourage new network investment on the part of the competitors. Friday’s action suggests that the FCC is taking the competitors’ and enterprise users’ concerns seriously.

In a statement, Walter McCormick, president of USTelecom, which represents the four carriers targeted by the FCC, argued that the carriers’ practices were fair and lawful and said the organization was “unconcerned by what the investigation will show.” He expressed concern, however, that “the launch of this costly investigation is contrary to the public interest and the commission’s oft-stated broadband modernization policy objectives.”

Representing challengers such as the Ad Hoc Telecommunications Users Committee, Comptel, and Public Knowledge, Competify issued a statement praising the FCC action. “The FCC’s efforts will help treat the incumbent broadband gatekeeper’s chronic illness, an illness that has left Americans paying the price – often in the form of hidden fees,” wrote Competify in a press release.