@jbtaylor on tech

If you were to do a quick search for news stories about the FCC today, you'd probably assume that the most important regulatory news coming out of the Federal Communications Commission was news that Verizon Wireless has agreed to pay $25 million to the federal government and to refund $52 million to its customers to settle charges about the company's "mystery fees." Verizon had been under investigation for incorrectly collecting and charging its customers fees for data never accessed on wireless phones.

Surely, that's big news, but it's not the biggest news to come from the FCC today.

A much bigger story is that the FCC issued a public notice in the special access docket which requests data from incumbent local exchange carriers and commercial mobile radio service providers.

How's that for telecom gobbledygook?

In English, what it means is the FCC is asking landline and wireless phone companies to provide confidential data about the prices charged and paid for special access connections. This request for data is a necessary step to take before the FCC can do anything to rein in Verizon, AT&T and other landline phone companies who dominate the special access market which our broadband economy depends upon.

As I've written in this Posterous before, special access circuits are the connections that wireless companies depend upon to connect your wireless call and to make sure your smartphone can surf the Web. Special access also connects your bank's ATM, the credit card payment system at a retail store like Wal-Mart or Best Buy and also the 1-800 reservations centers used by hotels, airlines and the like. It's also how your Internet service provider connects you to this or any other Website and how your email gets delivered.

The special access market is worth about $18 billion a year and it's a broken market. In economic terms that means there is no competition which pressures prices downward.

In the Washington, D.C. area, where I live and work, Verizon controls about 90 percent of the special access market. This means they can charge prices which are jacked up as much as 100 percent over their actual cost.

I call it Verizon's ATM machine.

Today's news about the FCC data request is a clear sign that the FCC is serious in enforcing the law and taking action in the special access docket.

Personally, I welcome it.

At Sprint, we issued the following statement to media about the FCC's step:

"Today’s announcement by the Federal Communications Commission that it is issuing a request for data about the special access market is an important milestone in the Commission’s efforts to fix this broken market. We would like to thank Chairman Genachowski, his fellow Commissioners and the FCC staff for their work to address this problem facing the country’s broadband economy.

Sprint has repeatedly indicated that it will provide the data the FCC needs to make a fact-based, data driven decision in this docket. Because the nation’s broadband economy depends upon these special access circuits, it is essential that the Commission get accurate and timely data from both purchasers and sellers of special access. We urge other communications companies to join with Sprint in fully cooperating with the FCC as it acts in addressing the matters pending in the docket.”

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.

Kim Hart at The Hill captures the latest on the fight to rein in Verizon, AT&T and Qwest and their monopoly pricing for the back end telephone lines known as special access circuits.

Thought you don't see a line item for special access on your phone bill, you're paying through the nose so AT&T, Verizon and Qwest can rake in record profits.

When do you pay? Every time you make a wireless phone call, every time you swipe your credit or debit card at an ATM or supermarket check out, every time you surf the Internet and every time you send an email.

The profit margins these big phone companies earn are, on average, over 100 percent above cost.

I am all for making money, but when they is no competition businesses can jack up prices and the rest of us get screwed.

That's exactly what's happening here.

Fortunately, the new FCC, led by Chairman Julius Genachowski, is taking a very active role in gathering data about the marketplace. That's the first step they must take before they can stop AT&T, Verizon and Qwest.

I'm hopeful they will do just that later this year.

To learn more about this issue, visit www.nochokepoints.org.