AT&T and Windstream received pricing flexibility relief in certain markets under Federal Communications Commission "special access" rules.
This gives AT&T and Windstream flexibility to raise their prices on the high-speed circuits that serve a variety of functions such as connecting cellular towers, carrying data to the Internet and serving high-volume business customers. Competitive local exchange carriers that partly rely on incumbent networks generally oppose such petitions because pricing flexibility could raise their costs.
The FCC didn't actively rule on the petitions, and they were granted by default under the agency's rules.
AT&T received pricing flexibility in San Antonio, Texas and the San Francisco/Oakland, Calif. area. Windstream received relief in Houston, Texas, Tulsa, Okla. and Lincoln, Neb.
"Our petitions measured the level of competition from facilities-based competitors, and clearly and easily met the triggers," wrote Bob Quinn, AT&T's Senior Vice President of Federal Regulatory and Chief Privacy Officer. "In fact, they underestimate the true level of competition by not measuring the cable companies and other pure facilities competitors who do not rely on incumbent investments to provide competitive service."
The FCC, though, is preparing to reform its special access rules, and it's possible that the Democrat-led agency could impose additional regulations if it finds that the market is not as competitive as AT&T says it is.
"Based on productive discussions among the Commissioners over the past three weeks, the petitions from AT&T and Windstream, which were filed under existing rules, will be allowed to be granted according to those rules. But those rules are not working as intended, and pursuant to ongoing discussions we expect the Commission will soon vote on an order setting out a path to reform them," said a senior FCC official in the office of Chairman Julius Genachowski. "As part of this path forward, we expect the Commission will also soon issue a mandatory, comprehensive data request, to collect the necessary data from incumbent and competitive providers."
Windstream, which owns both incumbent and competitive facilities, indicated it doesn't endorse the current FCC rules.
Eric Einhorn, Windstream's senior vice president of government affairs, said the company "remains concerned that the FCC has left open the possibility of significant price increases, with little advance notice, in those markets where carriers already have received pricing flexibility."
"Windstream hopes the Commission will not permit disruptive rate hikes to occur in the near term while comprehensive reform is pending," he said in a statement.