Tuesday, June 05, 2012

Special Pleading for Special Access Is Especially Counter-Productive

There are other candidates, but if one is looking for an indictment of what is wrong with the FCC's approach to regulation, there is no need to look further than the agency's handling of "special access" services. 
Never heard of them? It is not surprising because these are not services used by ordinary residential consumers, but rather they are "private lines" or "dedicated lines" used primarily by large corporate users and other communications carriers. 
In the late 90s, the FCC largely got out of the business of regulating the rates for special access services provided by the incumbent local exchange carriers because the agency determined that, at least in many places, competition existed in this market segment. This was a somewhat hopeful sign that the Commission was prepared to relax its traditional regulatory grip as competitive market conditions developed. Unfortunately, ever since the Commission's deregulatory action, some users of special access services have been agitating for the Commission to reverse course and re-regulate. 
This special pleading regarding special access is especially counter-productive – and the FCC should reject it. 
Over the years – unfortunately, when you refer to FCC proceedings, more often than not you are talking about "over the years," not months – I have written much, often in considerable detail, about why the ongoing campaign to re-regulate special access is wrong-headed. I don't propose to do so again today. But here is a piece published in June 2007, and here is one published in February 2009. 
These two pieces are both still instructive. Indeed, the rationale for not re-regulating special access is now even more persuasive, especially as the communications marketplace has become ever more competitive and as our nation is trying so hard to stimulate new investment. 
AT&T's Bob Quinn makes these points, and others, nicely in a blog posted today. 
This is the only point I want to emphasize here, which I made back in 2007, and since: No one argues that special access is a natural monopoly. Competitors have been seizing, and continue to seize, opportunities to enter the "special access" market segment and build out new network facilities – even though they are clever enough not to market their competitive services under the "special access" moniker. Bob cites recent examples. 
But if the FCC were to reverse course and require the incumbent providers to reduce the rates for their special access services, the incentive for competitors to continue investing in the build-out of new facilities would be suppressed. 
Thus, perversely, through new regulation, would the FCC undermine the policy, which ought to be especially important now, of encouraging new investment.