BT Americas (NYSE: BT) President Bas Burger says that AT&T (NYSE: T) and Verizon (NYSE: VZ), the two largest U.S. telcos, are price gouging competitors that purchase special access services.
According to industry estimates, AT&T and Verizon own nearly 80 percent of the special access market.
Burger said in an interview with the Financial Times that while BT Americas has a strong presence in roughly three-quarters of Fortune 500 companies in the U.S., its competitive position is being compromised due to how much AT&T and Verizon charge for wholesale services to connect their multisite business customers.
"For a western world country it is the worst I've seen," Burger said, adding that "There is not sufficient regulation to create competition: almost all access is being provided by two companies and they have divided the country among themselves."
The situation in the U.S. is different than that of BT's own domestic UK market where the country's telecom regulator Ofcom requires BT to provide access to their last mile network at regulated prices.
"Residential broadband subscribers in the UK have access to some of the cheapest superfast broadband rates amongst leading western economies," BT said in an FCC filing. "Business and public sector entities in the UK have access to some of the lowest priced Ethernet access services in the world. Regarding technology transition issues, BT stated that it is essential that replacement access services that are equivalent to legacy services and nondiscriminatory be in place before incumbent providers are permitted to withdraw legacy services."
Burger said that because the FCC has not implemented similar rules on AT&T, Verizon and other incumbent telcos BT has to increase its business service prices and lower its quality of service.
He added that the FCC should implement rules that would require AT&T and Verizon to provide a common level of service to anyone that purchases special access services. Today, neither telco is required to fix any faults that occur in a specific timeline, meaning that a business customer's data services would be degraded.
For its part, the FCC has been moving to create provisions to ensure competitors and business customers are not hurt by escalating special access price increases and the retirement of copper facilities.
Earlier this month, the FCC voted along party lines to approve a Further Notice of Proposed Rulemaking that will ensure consumers and businesses are not harmed as ILECs transition from legacy copper and TDM-based networks to IP-based networks.
Perhaps not surprisingly, AT&T, CenturyLink (NYSE: CTL) and Verizon argue that being required to provide equivalently priced IP-based special access services such as Ethernet that they provide over TDM today will impede their transition to IP.
For more:
- Financial Times has this article (sub. req.)
- see this FCC filing (.pdf)
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