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TMT Law Watch Business, legal, and policy developments affecting the telecom, media, and technology sector.

Special Access Rules Suspended by FCC

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By J. Bradford Currier, Marc Martin, and Marty Stern

The Federal Communications Commission has released a long-awaited order on special access, suspending rules that allowed incumbent providers pricing flexibility in their provision of these high capacity circuits to competitive providers and enterprise customers. Under rules originally adopted in 1999, the FCC regulated special access rates, but provided carriers with pricing flexibility in particular geographic areas where certain competitive showings were met, which allowed carriers to offer special access services at unregulated rates.

Special access is the middle mile workhorse of the telecom industry, backhauling traffic from cell towers for wireless providers, connecting the facilities of competitive carriers to enterprise customers, and transporting Internet traffic from various facilities to carrier points of presence. Since the adoption of special access pricing flexibility, special access customers have argued that the current rules allow special access providers, typically large incumbent providers, to raise prices above competitive levels even in the absence of meaningful competition. Special access providers have responded that the special access market is competitive and they are still subject to rate regulation despite competitive market conditions. The order suspends pricing flexibility pending the FCC’s adoption of a new special access regulatory framework. The order was adopted in a party-line vote, with the two Republican members of the Commission issuing strong dissents.

To facilitate the establishment of a new special access framework, the FCC will issue a data collection order within 60 days, which will ask carriers and other stakeholders for information regarding the appropriate regulatory regime for special access. The FCC aims to complete its investigation and adopt new special access rules by 2013.