No Rhyme or Reason to Turn Away from Competition

By Chip Pickering

For nearly 100 years, AT&T sat like Humpty Dumpty on a wall that blocked out competition — as a national monopoly built on the backs of ratepayers, stifling the life out of innovation.

It took several decades, bipartisan leadership and multiple presidents, Ronald Reagan and Bill Clinton, to finally cause HumpATTy to wobble on its perch.

By taking on this giant, we gave birth to thousands of companies, millions of jobs, and unleashed trillions in investment. At the heart of this economic stimulation has been competition policy. We made it the law of the land and started the process of reshaping the communications landscape.

But competition has not reached everywhere yet. Consumers and business customers are still frustrated with lack of choices. Why the delay? Over the past two decades, certain anti-competitive policy decisions and inactions have limited the full potential of competition policy. These walls are holding back the future.

Reform in the special access market is needed to strengthen new network providers’ ability to get through that wall of monopoly control, and reach business customers over the last mile. Delay is holding back billions of dollars in investment, and frustrating business customers who want more choice.

In 2005, all the kings’ horses and all the kings’ men were able to put AT&T back together with SBC. And AT&T has spent the last decade scaling its way back to its market power perch.

Ironically, it was old AT&T, the competitor, who led the effort to launch the special access proceeding. In fact, the same executives who praised special access benefits then, are now leading the attacks against it. Their goal is to delay the FCC from taking appropriate policy action to check monopolistic tendencies.

In an act of desperation, AT&T is claiming that the FCC doesn’t have sufficient information to act — even though it has just completed the largest data collection ever undertaken by the FCC in any proceeding.

With data in hand, now is the time for the Commission to act promptly to address this broken market. Finally ending monopoly pricing, and eliminating punishing terms and conditions, which are locking up customers and locking out competition.

SPECIAL ACCESS SERVICES ARE MONOPOLY-CONTROLLED

AT&T likes to take a helicopter view of the market, suggesting that there is competition in most census blocks. But let me ask you, when was the last time someone said, “I work in a census block?” Never.

That is because real people work in buildings — school buildings, hospital buildings, and fire station buildings. It is at these locations that the consumer demand for broadband and cloud service is growing.

The fact is the incumbents have a connection to virtually every commercial location in their respective territories, based on their historical monopoly. They are the only provider of special access services to the vast majority of these locations. That’s market power.

The Commission has the authority and duty to address the abuse of market power for these services, including Ethernet services. And while AT&T would like to pretend otherwise, Ethernet services have been and are very much a part of this proceeding. In fact, contrary to its claims, AT&T did not even receive forbearance on its existing Ethernet service.

EFFECTIVE COMPETITION DOES NOT EXIST FOR SPECIAL ACCESS SERVICES

In recent weeks, AT&T has also been keen to talk about the supposed fierce competition it faces from cable companies. In reality, most cable services are not special access services (i.e., dedicated services). Nonetheless, NCTA’s special access filing only demonstrates the ineffectiveness of a duopoly. It asserts more competition would be bad because it would force providers to improve service and lower prices ….um, YES, that is exactly what competitive markets force are intended to do.

While saying two providers is enough in the United States, in other countries Verizon acknowledges three or four providers are needed to make the market competitive, and AT&T is praising and investing in Mexico after it announced similar competition policy.

COMPETITION SPURS NETWORK INVESTMENT AND INNOVATION

Competition spurs more investment and innovation by both competitors and incumbents. Competitors’ new networks bring game-changing technologies to the market, such as Ethernet and VoIP, forcing incumbents to respond in kind.

Competitors rely on the law to provide access to the last-mile connections. Serving customers, especially those with multiple locations across several states, with innovative affordable services.

The suggestion by AT&T that these new network builders do not need access to reasonably priced last mile services is just cracked. If building to locations was as easy as the incumbents claim, why haven’t they (with hundreds of billions more resources than any competitor) built much, if at all, outside their incumbent regions?

The fact is when incumbents want to operate as competitors outside their regions, they too benefit from wholesale access policies. Incumbents like Windstream and TDS have attested to this fact.

Even a company as big as Comcast — who serves primarily residential homes, and would like to reach more buildings for business service — says constructing its own nationwide network is uneconomical, and indicated leasing wholesale access to existing networks is the best way to compete in the business market.

Thankfully, we have an FCC Chairman who’s been consistent in his efforts to promote and preserve competition. This means adopting and implementing comprehensive reform to ensure affordable rates for customers, and removing barriers that speed the deployment of new advanced networks.

He’s also launched an investigation into the Bell lock up, recognizing the urgent need to start freeing customers stuck in rotten long-term deals.

AT&T is afraid of a future where it truly faces robust competition. But with competition policy the law of the land, and a proven success story, there is no rhyme or reason not to forge ahead and forgo the past.

Chip Pickering is the CEO of INCOMPAS, The competetive network association, and a former Republican Member of Congress from Mississippi.

To learn more about the Bell Lock Up (#NoLockUp), watch this video:

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