Verizon-INCOMPAS Special Access Proposal Would Cripple Investment in Broadband

WASHINGTON, Aug. 30, 2016 /PRNewswire-USNewswire/ -- The Federal Communications Commission (FCC) must reject an alternative proposal for regulation of special access services offered by Verizon and INCOMPAS that would deliver a crippling blow to investment, according to a coalition of carriers in the business broadband market.

In comments filed Tuesday with the FCC, network infrastructure providers, including CenturyLink, Inc., Frontier Communications Corporation, FairPoint Communications, Inc., and Consolidated Communications, demonstrate that the Verizon-INCOMPAS proposal neither attempts to reach a reasonable solution between parties, nor works within the framework of the Commission's process in reviewing regulation.

"It should go without saying that the Commission may not, on the basis of an alleged compromise, adopt outcomes that are on their own indefensible. The core features of the Verizon-INCOMPAS proposal lack merit, and the Commission therefore must reject them," states the letter from the companies, who are members of the Invest in Broadband for America coalition.

In an analysis provided by the carriers, the first of several flaws is that the Verizon-INCOMPAS proposal misrepresents a majority of the competition that exists in the business broadband market today, by deeming services that provide speeds below 50 Mbps as non-competitive. However, the FCC's own data reveals that, in reality, competitive service providers account for the majority of the market for offerings below 50 Mbps. To disregard the providers that make up a majority of the market, and to drive prices below existing competitive rates, threatens the viability of broadband investment in underserved communities.

"The FCC's stated goal has been to incent broadband investment and competition across the country," said John Jones, CenturyLink Senior Vice President, Public Policy and Government Relations. "Yet the proposal offered by Verizon and INCOMPAS would hijack the FCC's process and drive investment and competition out of the market altogether."

"We want to put the goals of the FCC back in front and bring all of the principals in the marketplace together to fashion a solution that encourages investment and connects underserved communities that would be left in the dark by the Verizon-INCOMPAS proposal," Jones said.

The Verizon-INCOMPAS proposal also includes a substantial one-time rate reduction to the special access market—a proposal that is not based on data and costs and one that would significantly limit investment in broadband expansion. Additionally, it proposes ongoing rate cuts for services that are becoming more expensive to provide in today's telecommunications market.

The sponsorship of this alternate proposal by two companies who invest only a fraction of what true network providers invest annually in the broadband industry highlights the crucial flaw within Verizon-INCOMPAS's proposed "compromise"—that the proposal has been influenced by either a true disregard or a complete lack of understanding of long-term, effective network investment, planning, and maintenance that benefits not just competitors, but also community anchor institutions, according to Jones.

In their haste to impose price regulation and transfer operational costs to the only companies investing in broadband infrastructure, the Verizon-INCOMPAS proposal risks causing significant loss of investment in rural areas around the country, he said.

"We urge the FCC to reject this proposal that, if adopted, would cripple investment in needed infrastructure, result in job losses and raise the cost of capital for ongoing broadband deployment.  Our goal is to work with the Commission as it constructs a final order based upon the competitive realities of today's marketplace and the facts in the record," said Kathleen Abernathy, Executive Vice President for External Affairs at Frontier Communications.

The "Invest in Broadband for America" coalition (investinbroadband.org) is made up of CenturyLink, Inc. (NYSE:  CTL), Cincinnati Bell, Inc. (NYSE:  CBB), Consolidated Communications, Inc. (NASDAQ:  CNSL), FairPoint Communications, Inc. (NASDAQ:  FRP) and Frontier Communications (NASDAQ:  FTR). James E. Prieger's report can be found here.

SOURCE Invest in Broadband for America