@jbtaylor on tech

Stacey Higginbotham with GigaOm has an interesting "read-between-the-lines" reaction to AT&T's characterization of their network investments in a recent news release announcing AT&T's quarterly earnings.

Though Stacey focuses on AT&T's regulatory positions on network neutrality, she could just as easily focus on AT&T's position on special access reform. Ma Bell is making the very same argument for maintaining the status quo when in comes to special access. (Basically, in AT&T's view, they should be able to keep special access at jacked up prices because they've always done so.)

My reaction to AT&T: Um, no. No you shouldn't.

The special access prices AT&T and other landline companies charge competitors are essentially a hidden tax on broadband which impacts all of us: everyone who surfs the Internet, sends an email, makes a wireless call, uses an ATM machine or even makes a credit card payment at the gas pump -- all of us are impacted by these special access charges.

Fortunately, the FCC has indicated in the National Broadband Plan that they intend to address the special access issue and they've since shared a time table for action. While we're not sure what action they will take, I'm encouraged that there's progress.

The question is, will the policy makers, consumer groups and media who understand this complicated regulatory issue continue to keep the pressure on and demand that the these broken markets be fixed?

I'm cautiously optimistic.

Saturday's New York Times editorial endorsing the Federal Communications Commission's National Broadband Plan is worth a read. The Plan, which was released by the FCC last week, sets ambitious and important goals for the country.

The New York Times predicted that the Plan's proposal to foster competition is a "likely flashpoint". Perhaps they've met the lobbyists from AT&T, Qwest and Verizon -- those companies probably have the most invested in the status quo which the FCC seeks to change. They're also the biggest roadblocks to competition.

After reading The Times editorial, it's clear the editorial board understands the underlying flaws in the business of broadband, particularly the broken special access market which harms the wireless industry and business generally.

As The Times writes:

"Lack of competition allows big wire-line telecom companies to charge big fees to carry the signals of mobile providers over their wires."

That's the argument made by the NoChokePoints Coalition, of which Sprint is a member. As the FCC moves to implement the Plan, I expect you'll hear more about this issue.

Sprint and the members of the Coalition believe that the FCC must act to fix the special access market if taxpayer dollars destined for broadband expenditures are going to invested efficiently.

The Coalition's spokeswoman, Maura Corbett, addresses this underlying issue of competitiveness in the above video.

Last week, the public interest group Free Press held a policy summit which attracted every telecom policy nerd in Washington, DC, except me. (I has a prior commitment on my schedule.) Of all the speeches given, this one by Free Press's research director Derek Turner, caught my eye because it captures the history of telecommunications and competition over the last several years.

At Sprint, we don't agree with everything Derek said here, but we do agree with his conclusions about why the FCC should act to fix the wireless backhaul market.

What's wireless backhaul you ask? Here's a quick explantion. Most people don't realize that the only wireless part of a mobile phone call is that part where you handset transmits your call to the nearest cell phone tower. The rest of the conversation travels over a wireline network. Moving your wireless call across a wireline (or landline) network is what we call wireless backhaul. (Wireless backhaul is also called "special access" or "the middle mile.")

Because they have territorial monopolies, Verizon and AT&T don't compete with each other to provide wireless backhaul to cell phone companies. In fact they really don't compete with anyone. In the top 50 metro areas where Verizon has a territorial monopoly, it controls more than 90% of the wireless backhaul market in that area. (The same can be said for AT&T.)

Verizon and AT&T can do this because the FCC prematurely deregulated the market for the circuits used to provide backhaul before there was any evidence of signinificant competition. Guess what happened after the FCC deregulated? The landline companies like AT&T and Verizon jacked up their prices considerably. Verizon has markups that are 700% over cost in some areas according to Free Press.

Go to minute 12:47 in this video to hear what Derek has to say about backhaul. He explains it better than I can.