I’m often struck by the doublespeak that takes place in DC and, particularly, at the FCC when companies come to the agency to argue that the Commission should regulate their competitors. The Special Access proceeding at the Commission is one of those special dockets that is a real breeding ground for what I like to call “both sides of our mouth” (BSOM) advocacy. Whether it’s Verizon calling to regulate its cable competitors, BT arguing for lower special access rates than it charges its competitors in England, or Sprint-progeny Windstream arguing to re-regulate everyone’s retail rates but their own, this proceeding is a showcase for that special brand of BSOM advocacy.
But one company truly rises above the rest when it comes to saying one thing to the FCC and another to investors – Sprint. Not even two months ago, Sprint came to the FCC and argued that it has no choice but to purchase business broadband services from incumbent carriers because only they provide those connections for the vast majority of buildings with business data service (BDS) demand in the country.
Imagine my surprise then when I saw a recent Fierce Telecom article on Sprint’s Ethernet strategy. Once again, a Sprint executive’s candid statements reveal the reality that betrays their FCC advocacy. In the article, Sprint stated that cable business data services, specifically Ethernet over DOCSIS, will provide them with a competitive alternative to existing special access services and fill out an Ethernet footprint that covers “95 percent of the country.” Yet at the Commission, Sprint continues to discredit cable DOCSIS services as an alternative to incumbent carrier special access services.
It wasn’t very long ago that another Sprint executive stated that when it issued a request for proposal to the industry to supply Ethernet backhaul to their cell towers, they “will end up with 25 to 30 significant backhaul providers that will likely be a mix of incumbent LECs, cable MSOs, and alternative carriers…” Indeed, the many bidders clamoring to build Sprint’s Ethernet backhaul network demonstrates just how competitive the BDS market is. So, while Sprint’s economists completely ignore the impact of cable BDS in their filings at the Commission, their business executives have already negotiated agreements with these very same cable companies.
In light of the reality of the marketplace, the Commission should not waste any more time on these hollow arguments and should instead focus on the real issue underlying this proceeding – how will the Commission incent the industry to invest in more fiber and bring the benefits of real, facilities-based competition and broadband services to every area of the country? Sprint and its fellow carriers aren’t offering to invest their own capital to expand fiber and Ethernet services to buildings that today lack those facilities and services. Instead, they hope to convince the FCC to step in and regulate access to, and the pricing for, existing facilities by incumbent carriers and cable companies.
Chairman Wheeler himself acknowledges that successful competition will never come from carriers leasing other providers’ facilities and services. Yet the Commission’s proposed rulemaking ignores this and looks to make it easier for certain companies to do just that. Its proposal would not only reduce the incentives for Sprint and other companies to invest in facilities-based competition, but also for incumbent carriers and cable companies to continue to make the enormous, risk-based capital investments necessary to extend high speed fiber-based broadband services to additional locations. As NCTA recently said, “[W]hat provider is going to pursue this market opportunity if the ‘reward’ for taking the risk of building new fiber facilities is an obligation to provide access…at rates established by the Commission?” And let’s not forget that lowering the price of legacy services that are in significant decline, as the FCC is proposing here, will only extend the life of those services. How does this incent more fiber deployment?
As the deadline to submit official comments on the Commission’s proposal fast approaches, I have no doubt Sprint and its fellow cohorts will continue to bog down the docket with their bald-faced special brand of BSOM advocacy. Let’s just hope the Commission ignores their tall tales of woe and focuses on policies that encourage the investment necessary to bring high-speed broadband to more American businesses.
Posted by: Frank Simone on June 22, 2016 at 10:23 am