Sprint CEO Seeks Special Access, Intercarrier Comp Overhauls

The special access and intercarrier compensation rules “must be reformed,” Hesse said. “Virtually every broadband competitor and U.S. business depends upon special access.” But incumbents, particularly AT&T and Verizon, charge excessive prices and impose “onerous” terms, he said. That undermines wireline and wireless broadband investment, he said: “We hope that the FCC acts quickly to address these fundamental roadblocks to a robust, mobile broadband world.”

On proposed net neutrality rules, Hesse said Sprint is concerned that “the antithesis of open is clogged.” A network is like a “set of arteries or veins,” he said. Without proper management, a few users could take down a cell site, Hesse said. Sprint is “very” open to applications on its network and use of the system, but “we just don’t want the many to be disadvantaged or harmed because of the greed or the lack of attention of the few,” he said. Hesse said that, judging from his meetings in Washington, regulators seem “attentive to that.”

Hesse encouraged representatives of competitive companies in the audience to speak up in Washington and make sure “the facts are known.” The new FCC seems open-minded to competitive concerns, he said. “I don’t think that it will be black and white” -- companies’ getting “all or nothing” of what they want -- but it’s important to be active to reduce the harm of any new rules, he said.

A USTelecom official upset executives from Sprint and other supporters of special-access regulation. Discarding his PowerPoint presentation on a panel Monday, USTelecom Vice President Robert Mayer disputed arguments that the market for high-capacity services isn’t competitive by pointing out panels at the show about competitive business opportunities. He also criticized Sprint’s broadband strategy, saying it’s “hoarding” cash instead of investing enough in high-speed access. The regulation that Sprint seeks would amount to a “government bailout” taking money from USTelecom members making the investments, he said.

Sprint’s government affairs director, Charles McKee, called the barbs about his company “flamboyant” and “completely false.” He said Mayer isn’t taking into account the $4 billion that Sprint spent on its WiMAX network with Clearwire. And Sprint isn’t the only voice for regulation, he said. Last week, about 20 officials representing CLECs, wireless companies, public interest groups and small rural carriers met with the commission on the issue, he said.

Advocates of special-access regulation aren’t asking the government to “tie the hands” of the big carriers “so they can’t make a decent rate of return,” said Dan Mitchell, legal vice president of the National Telecommunications Cooperative Association. But prices should be tied to costs, he said. “Like any bottleneck facility, if you allow” high-capacity services “to be controlled by the provider who has market power it will lead to abuse and discrimination.”

FCC Chairman Julius Genachowski said last week the FCC will seek comment on the proper framework (CD Oct 9 p1) for studying the special access market. USTelecom is “all in favor of a reality check” and supports any FCC effort to get additional information about the market, he said. Data will show a great deal of competition, particularly from cable and fixed-wireless providers, he said.

“Sprint believes that the record has been fully developed on this multiple times, and the record has been refreshed multiple times,” McKee said. Information already available clearly shows that big carriers’ prices are inflated, he said. But the company is “happy” to get “off the table” questions about whether there’s enough data, McKee said. “If we can agree on a data request … and get it finished, then great, let’s do that so that we can quit arguing about whether or not there’s enough data.”

With the chairman’s announcement of a public notice about special access, it probably will have to be wrapped up when commitments that AT&T made for approval to acquire BellSouth expire in June 2010, said Patrick Williams, founding partner of the Cormac Group, on another panel. Genachowski’s letter to Senate Commerce Committee member Daniel Inouye, D-Hawaii, is the “most positive” development on special access in a long time, he said. It shows a willingness to move forward never apparent when Kevin Martin was the FCC chairman, Williams said.

Preserving Section 271

High special-access prices and forbearance petitions on Unbundled Network Element rules have increased the importance of the Telecom Act’s Section 271 to competitive providers, CLEC executives said on a panel Tuesday. Section 251 governs UNEs, and Section 271 requires unbundling of loops, transport and switching facilities. CLEC officials said preserving those rights is crucial to spurring broadband, and they are starting to present that message to the FCC.

Covad has historically relied on UNE rights under Section 251, said Assistant General Counsel Tony Hansel. But the past five years, the trend at the FCC has been to “take away from the CLECs and give” to AT&T, Verizon and Qwest. CLECs have lost UNEs through forbearance and triennial review proceedings, he said. “We now rely on 271 to get access to those same facilities.”

For Sprint, Section 271 provides the best road to getting access to the networks of AT&T, Verizon and Qwest, said Senior Counsel Rich Morris. Special access is “grossly overpriced,” and Sprint can’t take advantage of Section 251 because it doesn’t cover long-distance or wireless, he said. Section 271 is also important for CLECs that can use UNE rules, because Section 251 includes use restrictions, said NuVox Vice President Ed Cadieux. The 271 option costs more than 251, but not nearly as much as special access, he said. Special access is too expensive to provide small-business customers service, added Cbeyond Chief Administrative Officer William Weber.

Panelists said they're hopeful that the new FCC will listen to their concerns. Politics prevented action under Chairman Kevin Martin, Weber said. Competitors are “lucky” that Martin didn’t act, since he might have made things worse, Hansel said. In meetings with the FCC, competitors have begun laying the foundation for a push to protect Section 271 rights, Weber said. The FCC could take up the matter on its own, but competitors may need to formally seek action, Cadieux said. But the commission is very busy with broadband efforts and agency reorganization, he said. Then again, Weber said, the National Broadband Plan may open the door to quicker consideration of the question.