NoChokePoints: Report states Special Access reform would save $37bn, create 176k jobs. #fcc #broadband

NoChokePoints.orgRecommendation 4.8 of the National Broadband Plan  urges the FCC to ensure that special access rates are “just and reasonable,” noting that “special access circuits play a significant role in the availability and pricing of broadband service.” The Plan observes that the FCC is “currently considering the appropriate analytical framework” and calls on it to “establish an analytical approach” that will “ensure that rates, terms and conditions” for special access are “just and reasonable.” In Oct. 2009 the FCC established a pleading cycle on Special Access.

The NoChokePoints Coalition, a broad-based group that includes BT, Sprint, the New America Foundation and Public Knowledge, have just announced a report, filed with the FCC, “Economic Benefits of Special Access Price Reductions” that estimates that special access reform would increase national output by as much as $37.7 billion and create as many as 176,000 new jobs across the U.S. economy.

Spokesman Maura Corbett said “Currently, special access services produce excess rates of return as high as 77.9 percent, by contrast, the FCC’s last authorized rate of return was 11.25 percent.” and “The FCC has in its hands the power to create positive economic growth, and it needs to use it.”

Recommendation 4.8 in full:

RECOMMENDATION 4.8: The FCC should ensure that special access rates, terms and conditions are just and reasonable. Special access circuits are usually sold by incumbent local exchange carriers (LECs) and are used by businesses and competitive providers to connect customer locations and networks with dedicated, high-capacity links.

Special access circuits play a significant role in the availability and pricing of broadband service. For example, a competitive provider with its own fiber optic network in a city will frequently purchase special access connections from the incumbent provider in order to serve customer locations that are “off net.”

For many broadband providers, including small incumbent LECs, cable companies and wireless broadband providers, the cost of purchasing these high-capacity circuits is a significant expense of offering broadband service, particularly in small, rural communities.

The FCC regulates the rates, terms and conditions of these services primarily through interstate tariffs filed by incumbent LECs. However, the adequacy of the existing regulatory regime in ensuring that rates, terms and conditions for these services be just and reasonable has been subject to much debate.

Much of this criticism has centered on the FCC’s decisions to deregulate aspects of these services. In 1999, the FCC began to grant pricing flexibility for special access services in certain metropolitan areas. Since 2006, the FCC has deregulated many of the packet-switched, high-capacity Fast Ethernet and Gigabit Ethernet transport services offered by several incumbent LECs.

Business customers, community institutions and network providers regard these technologies as the most efficient method for connecting end-user locations and broadband networks to the Internet.

The FCC is currently considering the appropriate analytical framework for its review of these offerings.

The FCC needs to establish an analytical approach that will resolve these debates comprehensively and ensure that rates, terms and conditions for these services are just and reasonable.