Monday, July 09, 2012

"Special Access" Is Not A Dirty Word

by Deborah Taylor Tate

Interesting how some phrases gain a negative connotation. "Special access," a telecommunications pricing structure which dates back to the original 1984 AT&T divestiture, is one of those phrases. The fact that special access – essentially dedicated private lines – was devised a quarter century ago during one of the largest divestitures in history is probably an indication that the legacy service shouldn’t be so controversial in today's multi-platform, innovation rich, technological age. However, "special access" has been hijacked by some pro-consumer groups seeking to impose government regulation even in the midst of this competitive explosion.

Just take a look at what special access really is used for – almost three decades later – and I bet you will agree the service is not only positive but critical to our communications infrastructure and sometimes even our lives.

As telecommunications moved from the original monopoly environment (think Ma Bell) to a much more competitive arena, communications services began to be provided by various types of entities and players. Originally, new competitors secured market entry by hand-picking lucrative business customers. Soon, a myriad of government-developed regulatory machinations sprung up around special access.  From allowing competitors to use monopoly lines and facilities at discounted prices to allowing mere "reselling" of services with an authorized profit, baffling rules and regulations were later developed to assist in meeting the goal of "competition" in the "new" Telecommunications Act of 1996.

As we all know, competition can and frequently does result in lower prices. Competition can also mean a choice of goods that are priced differentially, with consumers making decisions based on their particular needs and various price points. For the simplest example, look at automobiles. You can buy a Prius and save money on gas but not necessarily on the sticker price. You can buy an older used car or a brand new state of the art luxury vehicle. In each example, the consumer weighs the benefits and the price and makes the buying decision, not the government.

With the explosion of the digital age, suddenly consumers had more abundant choices in their telephony services.  As communications became more critical and more industry sectors relied more heavily on new and innovative communications services, businesses required more personal attention and security. Inevitably, some businesses demanded dedicated lines.

Think about how the healthcare sector has progressed, due in large part to the innovations in information and communications technologies. A huge institution doing global research, such as Vanderbilt University, wants to contract for specific bandwidth, data speeds and extremely secure lines. This might be used for IP-protected research among faculty, shared medical research with other institutions, or even storage for huge volumes of patient information. Not to mention the requirements for robust video in performing remote surgery or remote imaging review by specialists from another state, or another country. Each of these services requires, and the customer – Vanderbilt – demands, high levels of stability, safety and security. None of us wants latency to occur during a surgical procedure or a diagnosis to be impossible due to a nebulous image.

Thus, the phrase "special access" grew in import. Certainly, it grew in significance for healthcare providers, but also for many other industries, from financial institutions to auto makers. Most of us would agree this was a very positive turn of events and a phrase that merely reflected its definition: providing certain access in special circumstances.

However, some competitors used this phrase as a way to exact even more government intervention and attempts to "regulate" what and how private enterprises like telecommunications companies could contract with large businesses with specific communications needs.

At the same time, these competitors refused to provide information concerning customer locations served and number of customers served, or their own pricing or tariffs. And the government thus far has not required them to do so. Again, in many cases, these competitors were merely "riding" on the same wires that the phone company had built, adding little or no facility investment of their own.

Now, even in this digital age of striking innovation and substantial investment by broadband companies – well over  $300 billion investment in the last ten years – new and innovative technologies across wireless platforms, and even satellite delivery mechanisms, these same tired decades-old arguments from the 80's are resurfacing. And government interference and regulation continue to raise costs, which are ultimately passed on to the consumer.

And, if incumbents’ prices are forced down by such interference and regulation, the development of further competition in markets which already support competition to some extent could be forestalled.

I don't know about you, but I think that the Vanderbilts out there, as well as our nation's small business owners, are smart enough to make their own decisions about their communications needs and services, without government bureaucrats in the middle.

And, whether you are a doctor, a patient, or a world-class researcher, special access sounds like a pretty good thing to me.