CenturyLink, AT&T Oppose FCC Market Analysis Proposal for Forbearance Petition

The FCC believes that “assessing whether and how competition for these services varies across customer classes is critical to analyzing CenturyLink’s request,” said the June public notice seeking comments. That’s particularly since CenturyLink’s broadband services have traditionally received differing levels of regulation based which of its affiliates -- CenturyTel, Embarq and Qwest -- were traditionally providing service in an area, said the agency. “An analysis that recognizes the potential for varying levels of competition among customer classes will provide a sound framework to consider CenturyLink’s assertion that it competes in a nationwide market for the provision of broadband enterprise services.” The commission said its proposed plan also aligns with the market analysis criteria it structured in 2010 after denying Qwest’s Phoenix forbearance petition (CD June 24/10 p1).

The FCC plan for analyzing CenturyLink’s petition doesn’t align with the criteria it has used “in connection with the ILECs that have already been granted forbearance, and whose profiles are no different than CenturyLink’s,” said the telco. If the proposed plan “resulted in a denial or partial denial of the Petition, however, such an outcome would harm consumers, fundamental fairness, bedrock principles of the Administrative Procedure Act” and FCC policy on regulatory parity, the telco said. The proposal would be inconsistent with 1996 Telecom Act Section 706 and with its Qwest Phoenix precedent because that criteria “recognized that broadband markets are appropriately assessed on a national basis,” CenturyLink said.

The FCC should use the “judicially approved analytical framework it already has employed to evaluate forbearance petitions involving enterprise broadband services” instead of its proposed plan, AT&T said. The proposed plan “is fundamentally at odds with the requirements and purposes” of Section 10, the telco said. The commission also can’t apply its Qwest Phoenix precedent to analyze CenturyLink’s petition, because the Qwest Phoenix order “concerned ‘legacy [TDM] facilities,’ not the enterprise broadband services that are at issue in CenturyLink’s current request for forbearance,” AT&T said. Enterprise broadband services require analysis criteria that encompass the broadband deployment goals Congress established in Section 706, AT&T said (http://bit.ly/1zq1TYz).

Comptel urged the FCC to move forward with its proposed plan, which it said should be based on joint Department of Justice and FTC guidelines for examining horizontal combinations. The criteria CenturyLink favors had led to “flawed” analyses of similar forbearance petitions in the past, Comptel said, noting that the market for enterprise broadband services “cannot be adequately evaluated with a simplistic analysis.” Comptel recommended the FCC examine CenturyLink’s wholesale market presence separately from the retail market and distinguish product markets based on capacity. Comptel also urged the FCC against assessing special access services “on a nationwide or large scale” (http://bit.ly/1k6iSW1).

Sprint said it agrees that the FCC should use the framework it described in the Qwest Phoenix order, arguing that CenturyLink’s proposed criteria “is over-broad and does not fully capture the high degree of market power it possesses, especially in more granularly defined geographic and product markets.” Like Comptel, Sprint urged the FCC to evaluate CenturyLink’s wholesale market separately from the retail market, arguing that such an approach has precedent in previous actions at the FCC and other federal agencies. Sprint said a separate analysis is particularly important for CenturyLink’s wholesale broadband services. Sprint said it has been “heavily dependent” on CenturyLink for broadband access facilities it needs to provide end-to-end service for its own enterprise customers, giving Sprint “firsthand experience of the impact of CenturyLink’s market power” (http://bit.ly/1kFf11S).

The four CLECs jointly said the FCC proposal was technology neutral, “the most reliable means of determining whether economic regulation is needed regardless of whether the facilities and services at issue utilize TDM-based technology, packet-based technology, or some other technology.” CenturyLink opposes the proposal because it “seeks forbearance from economic regulations governing last-mile connections that use packet-based and optical network technology,” the CLECs said. The FCC’s proposed analysis will inevitably be “fatal” to CenturyLink’s petition because that telco has failed to provide facts or analysis in the petition that explain how it meets each prong of Section 10, the CLECs said. The FCC must deny CenturyLink’s petition “unless CenturyLink faces competition from multiple, facilities-based actual competitors in a relevant market,” the CLECs said. “There is no basis for concluding that this is the case here” (http://bit.ly/1lUJmt1).