FCC Examination of Arcane Telecom Dispute May Benefit Cellphone Users

by Kristin Wong /  / Updated 

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A Federal Communications Commission investigation of special access charges levied by AT&T, Verizon, CenturyLink and Frontier on businesses, institutions and government agencies may have ramifications that extend to individual phone customers, according to consumer advocates.

The FCC announced Friday that it was conducting an investigation of the four companies’ pricing for so-called special access services.

Special access lines use an older technology called time-division multiplexing (TDM) to transmit data over “dedicated (usually copper) circuits that many business and other institutional users continue to rely on for their data and other communications needs,” the FCC said in its order initiating the investigation.

Unlike broadband Internet access used by consumers, these plans are still subject to tariff requirements and price regulation, and that’s at the heart of the dispute the FCC is looking into.

Competitors, including Sprint, Level 3 Communications and others, contend that “tariff pricing plans incorporate a complicated web of all-or-nothing bundling, loyalty and term commitments, complex enforcing penalties, circuit migration rules and other provisions” that effectively enable AT&T, Verizon, CenturyLink and Frontier to control the TDM market, which accounts for $25 billion in annual revenue, the FCC said in its order.

The competitors also complain that while tariff pricing plans are often described as discounted, “in reality the pricing they offer is often significantly higher than competitors’ pricing for comparable facilities,” it said.

Such practices harm both competition and innovation, it quoted the competitors as saying.

AT&T and the other companies argue that their pricing plans are not anticompetitive because they “are voluntary (and), purchasers have a number of options to meet their needs,” the FCC said.

The companies further maintain that “their plans benefit both parties– customers receive lower prices and the … seller receives some certainty about its expected revenues and network utilization.”

Paying $150 a Month or More for Cellphone Plan? You Have Options

Depending on what the FCC investigation finds, a ruling could have trickle-down benefits for consumers, according to Delara Derakhshani, policy counsel for Consumers Union.

“This hurts smaller Internet service providers trying to compete, but it also impacts consumers negatively, too,” she said. “Sometimes, providers pass on the larger costs they must incur along to their consumers, driving up the price of broadband service. Other times, the result is reduced quality of service, including disruptions, since providers must work with lower bandwidth.”

Derakshani adds that some of the complaints being made by the companies’ competitors may sound familiar to consumers.

“Cell phone contracts can also include tricky provisions that force the consumer to pay significant fees for terminating a contract early, for example, or include complex information about when a provider claims it has a right to slow down your service,” said Derakhshani. “Unfortunately, this information can sometimes be very tricky for the average consumer to decipher.”

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